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SBA Key Lending Components

Small Business Administration Financing -WHAT YOU NEED TO KNOW

Who or What is the SBA ?

SBA stands for The Small Business Administration which is an agency of the United States government. Its purpose is to help small businesses in dozens of programs, from information and seminars, to self-help desks, to the best known program: the SBA loan.

What is the SBA Loan Program?

(SBA) has created a program of government-guaranteed loans designed to help small businesses borrow money. For some, it is a convenience.  For others it is a necessity.  Many would not otherwise qualify for a regular bank loan.  The SBA provides the credit backup so that YOU can get the funds YOU need.

The stark truth is this; Most banks do not lend money to buy a business.  It is too risky. A few will extend credit to a successful business, but only if they already have your account.  And then it is like pulling teeth.

Its all about collateral. We have just seen a wave of foreclosures and some of our major banks faltering or being acquired by others.  They are now even tougher on “good collateral”  The SBA provides that by guaranteeing the loan to the bank itself.  Just like FDIC insurance insures your deposits to you, the SBA “insures” the bulk of the loan to the bank.

When it works right, SBA loans make it possible to qualify businesses more easily and provide them with more flexible terms than conventional loan options, letting you preserve working capital for other expenses.

Qualifying for an SBA loan used to be easier than qualifying for other loans. Although restrictions are tighter than this time last year, the SBA still allows higher loan-to-value ratios. Depending on your loan request, you may be able to borrow up to 90% of your financing needs. Second, SBA will consider the projected income of your business, not just historical cash flows, when making a decision. This may be especially advantageous if the business is growing rapidly and you have been reinvesting in it.

What no one is telling you , perhaps, is that many of the banks that were strong SBA lenders, have been forced to cut back and that has tricked back to SBA lending. Who is still a strong SBA lender and who going to waste your time?  That is a good question to ask Pro Biz.

Pro Biz wants to help growing businesses  – Growing businesses like yours!

You may want to purchase or renovate real estate, acquire fixed assets such as heavy machinery or specialized equipment, borrow working capital for ongoing financing needs, or fund the acquisition of new businesses. THE KEY IS A CERTIFIED APPRAISAL. (You knew we’d back back to this, didn’t you?)

The SBA will not approve or guarantee any new loans without one. (Note: some banks will insist on using their own appraisers.  This may or may not be to your advantage. There will be a lot of politics involved). This single fact should convince you of the need for a certified appraisal whether your financial transaction is an SBA loan or ANY of the other transactions discussed above. If the SBA now insists on a certified appraisal, so should you, the business owner.

Who is an SBA Loan for ?

SBA loans are for businesses that are:

  • Owner-operated.
  • For profit
  • Organized as a sole proprietorship, corporation, or professional partnership, or LLC
  • Within the size guidelines designated by the SBA
  • Unable to secure other credit under reasonable terms
  • Veterans and those who are serving our country in the United States military * (see below)

SBA loans are NOT for:

  • Large companies who simply want a better loan deal
  • Publicly held companies
  • Companies owned by investors or others not involved
  • Non Profit orgs.
  • Small businesses that are failing (a few exceptions)
  • Those with property who refuse to “put it all on the line”
  • Anyone in a hurry. SBA takes time.
  • Owners who won’t sign a personal guarantee.

NOTE: There is also something new and wonderful for small businesses owned by Vets and others which is much faster.  It is called Patriot Express.  Patriot Express SBA loans are available to applicants who qualify for SBA, own more than 51% of the business and are either:

  • Veterans
  • Active Duty Military
  • Reservist or National Guard
  • Spouse of the above

SBA Express/Patriot Express features:

  • Available for amounts $10,000 and up
  • Available as a line of credit or term loan
  • Designed to provide easy access to working capital and fund equipment purchases
  • Loans in excess of $100,000 secured by business or personal assets
  • Fixed or variable rates not exceeding 6.50% over prime rate (New York Prime rate)
  • Maximum term of 7 years
  • Fully and partially amortizing payment options
  • Small Business Administration fee does apply to all loans

Other SBA loan programs?

Yes, it goes on and on.  See the www.sba.gov website and remember it was Pro Biz that sent you there!

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