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SBA Business Course – Palo Alto Software #business #online

#sba business plan

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SBA Course

In this webinar for the U.S. Small Business Administration, business planning expert Tim Berry helps entrepreneurs and small businesses better understand how to create a business plan.

SBA s participation in this co-sponsorship is not an endorsement of the views, opinions, products or services of any cosponsor or other person or entity.

All SBA programs, services and cosponsored activities are extended to the public on a nondiscriminatory basis.

Use this form to request the certificate of completion after finishing the course.

Reasonable arrangements for persons with disabilities will be made if requested at least two weeks in advance. You can contact our customer care team to make such a request.

Co-sponsorship Authorization ##: 05-6010-71

This website may contain hypertext links to information and websites created and maintained by other public and private entities. This information and these links are not owned or sponsored by the U.S. Small Business Administration and are provided for the user s convenience. The Federal Government or SBA is not responsible for the content, accuracy, relevance, timeliness or completeness of any websites or information that may be accessed from this site. Furthermore, the inclusion of such links does not constitute or imply an endorsement by the Federal Government or SBA of any organizations or company, or its opinions, products, or services. Please use caution and use your best judgment when considering a product, service or opinion offered by a linked website.

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How to Find the Right SBA Loan for Your Small Business #business #game

#small business administration loans

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How to Find the Right SBA Loan for Your Small Business

Small businesses are the backbone of the U.S. economy: According to data from the 2010 U.S. Census, there are 27.9 million small businesses registered in the United States, employing 120 million people almost half of the nation s workforce.

Part of what the Small Business Administration (SBA) does is help America s small businesses secure the funding they need to operate and grow. As a federal government agency, the SBA does not lend small businesses money directly. Instead, it sets guidelines for loans that are made by its partners, which include banks, credit unions, community development organizations and microlending institutions. The SBA guarantees a portion of these loans granted by these institutions will be repaid, eliminating some of the risk for lenders.

Kale Gaston, head of the SBA Lending Group for TD Bank in Greenville, S.C. said SBA loans do a great job of helping lenders say yes to borrowers. He also noted that SBA programs provide better access to capital and credit enhancement for small business owners. For example, since the SBA guaranty lowers the risk in case of a loan default, lenders are able to provide funding when the down payment available is too low or the business s cash flow is not high enough for traditional options.

SBA lenders can provide longer terms as well. Instead of five or 10 years for a real estate purchase with a balloon payment at the end, the lender can give terms for 25 years, eliminating the balloon (i.e. final payment) or need to refinance every few years, Gaston said. For shorter-term assets, like equipment, terms could go to 10 years instead of the usual three to five years.

SBA loan programs

The SBA s loan programs are designed specifically for small business owners who don t have access to other reasonably termed financing. There are four main types of loan programs:

7(a) loan program: This is the SBA s primary program to help startups and existing small businesses obtain financing. 7(a) loans are the most basic and most commonly used type of loan, as well as the most flexible. The money can be used for a variety of general business purposes, including working capital, machinery and equipment, furniture and fixtures, purchasing or renovating land and buildings, leasehold improvements and debt refinancing. Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets. Borrowers can apply through a participating lender institution.

CDC/504 loan program: This program provides businesses with long-term, fixed-rate financing for major assets, such as land and buildings. The loans are typically structured with the SBA providing 40 percent of the total project costs, a participating lender covering up to 50 percent and the borrower putting up the remaining 10 percent. Funds from a 504 loan can be used to purchase existing buildings, land or machinery, and to construct or renovate facilities. These loans cannot be used for working capital or inventory. Under the 504 program, a business qualifies if it has a tangible net worth of less than $15 million and an average net income of $5 million or less after federal income taxes for the two years before application. The maximum amount of a 504 loan is $5 million.

Microloan program: This program offers very small loans to startups, or newly established or growing small businesses. The loans can be used for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery or equipment. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit organizations with experience in lending and technical assistance. Those intermediaries then make loans of up to $50,000, with the average loan being about $13,000. The loan cannot be used to pay existing debts or to purchase real estate.

Disaster loans: The SBA offers this option to businesses that have been affected by a declared disaster. These low-interest loans can be used to repair or replace damaged real estate, personal property, machinery, equipment, inventory and business assets.

Further details on each type of loan program can be found on the SBA s website .

What you ll need to apply

When applying for an SBA loan, you ll need to fill out forms and documents for the specific loan you re trying to get. The SBA also encourages borrowers to gather some basic information that all lenders will ask for, regardless of the loan type. The following items are usually required:

  • Personal background and financial statements
  • Business financial statements
  • Profit-and-loss statement (three years)
  • Current within the last six months
  • List of debts
  • Projected financial statements
  • Business certificate/license
  • Income tax returns
  • R sum s for key team members
  • Business overview and history
  • Business lease

The SBA also advises small businesses applying for a loan to be prepared to answer several questions:

  • Why are you applying for this loan?
  • How will the loan proceeds be used?
  • What assets need to be purchased, and who are your suppliers?
  • What other business debt do you have, and who are your creditors?
  • Who are the members of your management team?

Why your business plan matters

Whether you re a new startup or an established company, the key to a successful application is a well-written business plan .

The business plan not only is the road map that will guide the business from planning to startup to (hopefully) success, but also will show any potential lender that the potential business owner does have a clear view and understanding of the business, how to run it and, most importantly, how the loan will be repaid, David Hall, a public affairs specialist with the SBA in Washington, D.C. said in an email interview with Business News Daily.

Gaston agreed, noting that lenders want to know how knowledgeable you are about your business and the competitive market.

The concept may be great, but what the lender is looking for is that the individual is driven, capable and determined, Gaston said. You really need to understand what you are doing every step of the way and be able to convey that to the lender during the application process.

Hall also recommended that business owners take full advantage of the business planning resources offered by the SBA and its partners, such as SCORE. SBDCs (Small Business Development Centers) and WBCs (Women Business Centers).

Finding a lender

While Gaston acknowledged that applying for an SBA loan is a process, she said working with a lender that has experience can make that process a lot easier. To find experienced SBA lenders in your area, he suggested talking to folks locally in the market and looking for a lender that is part of the SBA s Preferred Lender program. This program gives thousands of lenders per year delegated authority to approve loans based on certain criteria, shortening the time period between application and approval.

You can find SBA lenders by going online at sba.gov. contacting local accountants and attorneys, and looking for lenders with a large local presence. SBDCs also provide document support and lender referrals.

The SBA program drives a tremendous amount of value in the economy, lending approximately $30 billion to small businesses annually, Gaston said. It takes businesses to the next level, is appropriately structured and enables them to be successful.

Additional reporting by Business News Daily contributor Elizabeth Palermo.

With an Associate s Degree in Business Management and nearly twenty years in senior management positions, Marci brings a real life perspective to her articles about business and leadership. She began freelancing in 2012 and became a contributing writer for Business News Daily in 2015.

You May Also like

What is the SBA Microloan Program?

  • Writing a Business Plan: Tips from the SBA





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  • SBA Loan Rates – 504 and 7a Loan Rates #designer #business #cards

    #sba loan rates

    #

    SBA 504 Loan Rate – 4.08% Effective Rate*

    SBA 504 Rates for the August 2016

    The 504 loan rate (effective rate) for 20 year commercial real estate loans is 4.08% * The effective rate is inclusive of all servicing fees. (Some lenders do not advertise the all inclusive rate, so you may see the rate advertised slightly lower in some areas of the country).

    The 504 program consists of 2 loans:

    1. first mortgage for approx 50% of the project cost
  • 504 second mortgage guaranteed by the SBA (this is the rate referenced above).
  • SBA 7a Loan Rates

    SBA 7a rates can be either fixed or variable.

    The 25 year fixed rate is very competitive and never adjusts. These loans are available if the majority of the loan proceeds are used for commercial real estate. The underwriting can be a little tougher than for a variable rate, but this is a phenomenal opportunity to lock in great low rates for the long term if you qualify.

    Variable rates are typicallyPrime + a margin not to exceed 2.75% , The margin is set by the lender based on their cost of funds and the quality of the loan. Most lenders will offer something between Prime + 1.25% and Prime + 2.75%. 7a loans can also be based on the one month LIBOR rate.

    Please contact us at 1-800-414-5285 for more information about the possibility of a fixed rate

    10 Year Loans for Business Acquisitions

    The SBA 7a is also a great solution for business acquisitions as well as refinancing of business debt or partner buyouts and the rates can be fixed or variable for up to 10 years.

    504 Loan Rates


    First Mortgage Rates:
    Currently range from high 3% range to as much as 6.5% depending on loan size, term, property type and strength of transaction and are typically amortized for 20 to 25 years and in some cases as long as 30 years.

    First mortgage rates and terms will vary depending on the type and size of the loan with the 5 year fixed rate/25 year amortization being the most common. After the initial 5 years the loan could adjust as frequently as monthly or as infrequently as every 5 years depending on the lender.


    August 2016 504 Mortgage Rate: 4.08%*
    – fixed for 20 years.


    The combination of the 2 loans and the fact that the second mortgage is always permanently fixed make for very attractive 504 loan terms.

    SBA 504 Equipment Loans are typically 10 years and can be anywhere from .25 to 1.5% lower than commercial real estate transactions .

    SBA 504 Refinance Rates may be slightly higher and multi-purpose property rates are typically lower than single or special use properties like hotels or self storage properties.

    New Fixed Rate Option for 504 First Mortgage

    There is also a low rate SBA fixed rate option available for multi-use properties and some special use/single purpose properties for the first mortgage portion of the 504 program. The loan is fixed for the entire term of the 25 year first mortgage.


    The rates for this program are very competitive and when combined with the low rate second mortgage it makes for very attractive fully fixed long term rates.
    (The rate for the first mortgage will vary depending on loan size, prepayment penalty, etc).

    Again, this program is a true fixed rate that will never adjust . so while the rate may be higher than the 5 year fixed and other options, this loan is the better choice if you intend to own your property for the long haul.


    Please contact us for more information about this program: 1-800-414-5285

    504 Loan Payment Example

    Here is an example of loan amounts and payments for a $1.5 million transaction with 10% down and a 1st mortgage rate of 4.8%:

    Down Payment/Equity Injection. $150,000

    First Mortgage: $750,000

    Second Mortgage: $600,000

    The payments would be as follows:

    First Mortgage: $4384.43

    Second Mortgage: $3661.22

    Total of Payments. $8045.65

    The 504 offers a low monthly payment with the least cash out of pocket and it compares very favorably with most any other commercial loan program. It is available for purchase, refinance, construction or renovation of owner occupied (owner-user) commercial property.


    Please contact us at 1-800-414-5285 to find out how the SBA 504 or 7a could help your business.

    Please note: the SBA does not make loans directly and interest rates are set by the lenders who make the loans.

    * Rate includes fees to SBA, CDC and central servicing agent. (Rates change monthly).





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    Find A Local SBA Office #small #business #finance

    #find a business

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    Find A Local SBA Office

    Looking for small business counseling and training close to home? SBA can help! SBA provides small business counseling and training through District Offices across the country. Business guidance and support is crucial to increasing your odds of long-term success. Find counseling, training and business development specialists providing free and low-cost services in your area.

    SBA District Offices

    SBA’s District Offices are responsible for providing businesses with the tools for enhancing and growing their businesses. SBA’s District Offices also oversee the delivery of SBA’s programs throughout the states such as:

    Free counseling, advice and information on starting a business through SCORE .

    Financial assistance for new or existing businesses through guaranteed loans made by area bank and non-bank lenders.

    Free consulting services through the network of Small Business Development Centers. SBDCs also conduct training events throughout the district – some require a nominal registration fee.

    Assistance to businesses owned and controlled by socially and economically disadvantaged individuals through the Minority Enterprise Development Program.

    Women’s Business Ownership Representatives are available to advise women business owners.

    Check out your local District Office today!





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    SBA Loan Rates – 504 and 7a Loan Rates #business #intelligence #tools

    #sba loan rates

    #

    SBA 504 Loan Rate – 4.08% Effective Rate*

    SBA 504 Rates for the August 2016

    The 504 loan rate (effective rate) for 20 year commercial real estate loans is 4.08% * The effective rate is inclusive of all servicing fees. (Some lenders do not advertise the all inclusive rate, so you may see the rate advertised slightly lower in some areas of the country).

    The 504 program consists of 2 loans:

    1. first mortgage for approx 50% of the project cost
  • 504 second mortgage guaranteed by the SBA (this is the rate referenced above).
  • SBA 7a Loan Rates

    SBA 7a rates can be either fixed or variable.

    The 25 year fixed rate is very competitive and never adjusts. These loans are available if the majority of the loan proceeds are used for commercial real estate. The underwriting can be a little tougher than for a variable rate, but this is a phenomenal opportunity to lock in great low rates for the long term if you qualify.

    Variable rates are typicallyPrime + a margin not to exceed 2.75% , The margin is set by the lender based on their cost of funds and the quality of the loan. Most lenders will offer something between Prime + 1.25% and Prime + 2.75%. 7a loans can also be based on the one month LIBOR rate.

    Please contact us at 1-800-414-5285 for more information about the possibility of a fixed rate

    10 Year Loans for Business Acquisitions

    The SBA 7a is also a great solution for business acquisitions as well as refinancing of business debt or partner buyouts and the rates can be fixed or variable for up to 10 years.

    504 Loan Rates


    First Mortgage Rates:
    Currently range from high 3% range to as much as 6.5% depending on loan size, term, property type and strength of transaction and are typically amortized for 20 to 25 years and in some cases as long as 30 years.

    First mortgage rates and terms will vary depending on the type and size of the loan with the 5 year fixed rate/25 year amortization being the most common. After the initial 5 years the loan could adjust as frequently as monthly or as infrequently as every 5 years depending on the lender.


    August 2016 504 Mortgage Rate: 4.08%*
    – fixed for 20 years.


    The combination of the 2 loans and the fact that the second mortgage is always permanently fixed make for very attractive 504 loan terms.

    SBA 504 Equipment Loans are typically 10 years and can be anywhere from .25 to 1.5% lower than commercial real estate transactions .

    SBA 504 Refinance Rates may be slightly higher and multi-purpose property rates are typically lower than single or special use properties like hotels or self storage properties.

    New Fixed Rate Option for 504 First Mortgage

    There is also a low rate SBA fixed rate option available for multi-use properties and some special use/single purpose properties for the first mortgage portion of the 504 program. The loan is fixed for the entire term of the 25 year first mortgage.


    The rates for this program are very competitive and when combined with the low rate second mortgage it makes for very attractive fully fixed long term rates.
    (The rate for the first mortgage will vary depending on loan size, prepayment penalty, etc).

    Again, this program is a true fixed rate that will never adjust . so while the rate may be higher than the 5 year fixed and other options, this loan is the better choice if you intend to own your property for the long haul.


    Please contact us for more information about this program: 1-800-414-5285

    504 Loan Payment Example

    Here is an example of loan amounts and payments for a $1.5 million transaction with 10% down and a 1st mortgage rate of 4.8%:

    Down Payment/Equity Injection. $150,000

    First Mortgage: $750,000

    Second Mortgage: $600,000

    The payments would be as follows:

    First Mortgage: $4384.43

    Second Mortgage: $3661.22

    Total of Payments. $8045.65

    The 504 offers a low monthly payment with the least cash out of pocket and it compares very favorably with most any other commercial loan program. It is available for purchase, refinance, construction or renovation of owner occupied (owner-user) commercial property.


    Please contact us at 1-800-414-5285 to find out how the SBA 504 or 7a could help your business.

    Please note: the SBA does not make loans directly and interest rates are set by the lenders who make the loans.

    * Rate includes fees to SBA, CDC and central servicing agent. (Rates change monthly).





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    SBA Loans for Your Startup #home #business #ideas #for #women

    #start up business loans

    #

    SBA Loans for Your Startup

    Despite what you might see on late-night infomercials or some websites, none of the SBA s loan programs involve free money, government grants or no-interest loans. In fact, the SBA doesn t even lend funds directly to entrepreneurs–you ll need to strike up a relationship with a loan officer at your local bank, credit union or nonprofit financial intermediary to access the programs.

    But once you do, there s an array of resources aimed at getting you the capital you need to start or expand your small business. Last year, more than $50 million in SBA loans were being provided per day to U.S. small businesses. For this month s column, I thought I d review the latest descriptions and eligibility criteria for the SBA s three most popular loan programs.

    7(a) Loan Program
    The 7(a) is the SBA s most popular loan program. As a small-business owner, you can get up to $750,000 from your local 7(a) lender, backed by a partial guarantee from the SBA. Note that the SBA is not lending you any money directly. What they are doing is making it less risky for a local lender to provide you with financing. 7(a) loans are typically used for working capital, asset purchases and leasehold improvements. All the owners of a business who hold an ownership stake of 20 percent or more are required to personally guarantee the loan.

    Once your lender decides that 7(a) money is what you need, you ll probably start hearing the names of the different 7(a) programs. For example if you re borrowing less than $150,000, you may be headed toward the Lowdoc program, which was created in 1993 to reduce burdensome paperwork. A Lowdoc loan application is a one-page form; your application is on one side and the lender s request to the SBA for the guaranty for your loan is on the other. The SBA responds to Lowdoc applications within 36 hours.

    The SBA Express is a program for lenders with a good SBA-lending track record. It s aimed at getting money–in this case, as much as $250,000–quickly into the hands of entrepreneurs. Based on the success of the SBA Express program, the SBA initiated CommunityExpress, specifically designed to improve access to capital for low- and moderate-income entrepreneurs and to provide both pre- and post-loan technical assistance.

    Eligibility: The eligibility criteria for the 7(a) program are the broadest of all the SBA loan programs, but they re still quite restrictive for startups and businesses related to financial services. See this page on the SBA s website for a list of the types of business that are eligible. In general, all SBA programs are targeted at small companies (that is, businesses with less than $7 million in tangible net worth and less than $2.5 million in net income), but typically most banks won t lend to startup businesses that don t have two to three years worth of financial statements and some owner s equity in the business. Some banks will allow you to use money from relatives as part of your equity, but you re required to formalize these small business loans with a repayment plan that s subordinate to the bank debt.

    504 Loan Program
    The 504 loan program is intended to supply funds for asset purchases, such as land or equipment. Typically, the asset purchase is funded by a loan from a bank or other lender in your area, along with a second loan from a certified development company (CDC) that s funded with an SBA guarantee for up to 40 percent of the value of the asset–which is generally a loan of up to $1 million–and a contribution of 10 percent from the equity of the borrower. This financing structure helps the primary lender–the bank–reduce its exposure by relying on the CDC and the SBA to shoulder much of the risk.

    Eligibility: Like the 7(a) program, the 504 program is restricted to small businesses with less than $7 million in tangible net worth and less than $2.5 million in net income. However, since funds from 504 loans can t be used for working capital or inventory, consolidating or repaying debt, or refinancing, this program tends to exclude most service businesses that need to purchase land or equipment. Personal guarantees are also required for 504 loans.

    7(m) Microloan Program
    The Microloan program is presently under budgetary review, and the political winds aren t currently blowing in its favor. The program is intended to provide small loans of up to $35,000 that can be used for a broad range of purposes to start and grow a business. Unlike the 7(a) program, the funds to be loaned don t come from banks; rather, they come directly from the SBA (now you know why it s unpopular with the folks in charge of the budget) and are administered to business owners via nonprofit community-based intermediaries. To find the name of an intermediary micro-lender in your area, visit this page of the SBA s website.

    Eligibility: The Microloan program is startup friendly. All new businesses are eligible to apply. Although the maximum loan amount is $35,000, the average loan is approximately $10,000. The only catch is that Microloan borrowers typically have to enroll in technical assistance classes administered by the micro-lender intermediaries. For some entrepreneurs, this is a very helpful resource that provides cost-effective business training. Others, however, perceive it as a waste of time, although it s a necessary pre-condition to getting a Microloan.

    Although I promised reviews of just the three top SBA loan programs, I didn t want to fail to mention two other special purpose loan programs targeted at serving particular types of businesses. The Export Working Capital Program provides short-term working capital to small, export businesses, and the DELTA program provides both financial and technical assistance to help businesses dependent on defense installations transition to civilian markets. You can log on to the SBA s website to learn more about these two programs.

    The long and short of it is, if you need small-business loan capital, there s probably an SBA program out there for you.





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    How to Find the Right SBA Loan for Your Small Business #business #startup #loans

    #small business administration loans

    #

    How to Find the Right SBA Loan for Your Small Business

    Small businesses are the backbone of the U.S. economy: According to data from the 2010 U.S. Census, there are 27.9 million small businesses registered in the United States, employing 120 million people almost half of the nation s workforce.

    Part of what the Small Business Administration (SBA) does is help America s small businesses secure the funding they need to operate and grow. As a federal government agency, the SBA does not lend small businesses money directly. Instead, it sets guidelines for loans that are made by its partners, which include banks, credit unions, community development organizations and microlending institutions. The SBA guarantees a portion of these loans granted by these institutions will be repaid, eliminating some of the risk for lenders.

    Kale Gaston, head of the SBA Lending Group for TD Bank in Greenville, S.C. said SBA loans do a great job of helping lenders say yes to borrowers. He also noted that SBA programs provide better access to capital and credit enhancement for small business owners. For example, since the SBA guaranty lowers the risk in case of a loan default, lenders are able to provide funding when the down payment available is too low or the business s cash flow is not high enough for traditional options.

    SBA lenders can provide longer terms as well. Instead of five or 10 years for a real estate purchase with a balloon payment at the end, the lender can give terms for 25 years, eliminating the balloon (i.e. final payment) or need to refinance every few years, Gaston said. For shorter-term assets, like equipment, terms could go to 10 years instead of the usual three to five years.

    SBA loan programs

    The SBA s loan programs are designed specifically for small business owners who don t have access to other reasonably termed financing. There are four main types of loan programs:

    7(a) loan program: This is the SBA s primary program to help startups and existing small businesses obtain financing. 7(a) loans are the most basic and most commonly used type of loan, as well as the most flexible. The money can be used for a variety of general business purposes, including working capital, machinery and equipment, furniture and fixtures, purchasing or renovating land and buildings, leasehold improvements and debt refinancing. Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets. Borrowers can apply through a participating lender institution.

    CDC/504 loan program: This program provides businesses with long-term, fixed-rate financing for major assets, such as land and buildings. The loans are typically structured with the SBA providing 40 percent of the total project costs, a participating lender covering up to 50 percent and the borrower putting up the remaining 10 percent. Funds from a 504 loan can be used to purchase existing buildings, land or machinery, and to construct or renovate facilities. These loans cannot be used for working capital or inventory. Under the 504 program, a business qualifies if it has a tangible net worth of less than $15 million and an average net income of $5 million or less after federal income taxes for the two years before application. The maximum amount of a 504 loan is $5 million.

    Microloan program: This program offers very small loans to startups, or newly established or growing small businesses. The loans can be used for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery or equipment. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit organizations with experience in lending and technical assistance. Those intermediaries then make loans of up to $50,000, with the average loan being about $13,000. The loan cannot be used to pay existing debts or to purchase real estate.

    Disaster loans: The SBA offers this option to businesses that have been affected by a declared disaster. These low-interest loans can be used to repair or replace damaged real estate, personal property, machinery, equipment, inventory and business assets.

    Further details on each type of loan program can be found on the SBA s website .

    What you ll need to apply

    When applying for an SBA loan, you ll need to fill out forms and documents for the specific loan you re trying to get. The SBA also encourages borrowers to gather some basic information that all lenders will ask for, regardless of the loan type. The following items are usually required:

    • Personal background and financial statements
    • Business financial statements
    • Profit-and-loss statement (three years)
    • Current within the last six months
    • List of debts
    • Projected financial statements
    • Business certificate/license
    • Income tax returns
    • R sum s for key team members
    • Business overview and history
    • Business lease

    The SBA also advises small businesses applying for a loan to be prepared to answer several questions:

    • Why are you applying for this loan?
    • How will the loan proceeds be used?
    • What assets need to be purchased, and who are your suppliers?
    • What other business debt do you have, and who are your creditors?
    • Who are the members of your management team?

    Why your business plan matters

    Whether you re a new startup or an established company, the key to a successful application is a well-written business plan .

    The business plan not only is the road map that will guide the business from planning to startup to (hopefully) success, but also will show any potential lender that the potential business owner does have a clear view and understanding of the business, how to run it and, most importantly, how the loan will be repaid, David Hall, a public affairs specialist with the SBA in Washington, D.C. said in an email interview with Business News Daily.

    Gaston agreed, noting that lenders want to know how knowledgeable you are about your business and the competitive market.

    The concept may be great, but what the lender is looking for is that the individual is driven, capable and determined, Gaston said. You really need to understand what you are doing every step of the way and be able to convey that to the lender during the application process.

    Hall also recommended that business owners take full advantage of the business planning resources offered by the SBA and its partners, such as SCORE. SBDCs (Small Business Development Centers) and WBCs (Women Business Centers).

    Finding a lender

    While Gaston acknowledged that applying for an SBA loan is a process, she said working with a lender that has experience can make that process a lot easier. To find experienced SBA lenders in your area, he suggested talking to folks locally in the market and looking for a lender that is part of the SBA s Preferred Lender program. This program gives thousands of lenders per year delegated authority to approve loans based on certain criteria, shortening the time period between application and approval.

    You can find SBA lenders by going online at sba.gov. contacting local accountants and attorneys, and looking for lenders with a large local presence. SBDCs also provide document support and lender referrals.

    The SBA program drives a tremendous amount of value in the economy, lending approximately $30 billion to small businesses annually, Gaston said. It takes businesses to the next level, is appropriately structured and enables them to be successful.

    Additional reporting by Business News Daily contributor Elizabeth Palermo.

    With an Associate s Degree in Business Management and nearly twenty years in senior management positions, Marci brings a real life perspective to her articles about business and leadership. She began freelancing in 2012 and became a contributing writer for Business News Daily in 2015.

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  • How to use the SBA for business acquisition financing – Smart Business Magazine #sba

    #business acquisition loan

    #

    How to use the SBA for business acquisition financing

    Most businesses have intangible assets that are difficult to value and nearly impossible to collateralize. You will hear terms like “blue sky” or “goodwill” to describe these assets.

    Due to the more flexible collateralization standards associated with U.S. Small Business Administration (SBA) loans, these assets can be financed along with the more tangible assets that are a part of the business acquisition. This is just one reason why a business owner should consider an SBA loan for a change of ownership or business acquisition, over a conventional loan.

    Smart Business spoke with Romona Davis, vice president of SBA Commercial Lending at Ridgestone Bank. about the advantages of utilizing the SBA for business acquisition financing.

    Beyond flexible collateralization standards, why else are SBA loans more attractive?

    Conventional loans for business acquisitions are based on a three- or five-year term. This can make it tough for the business to meet the debt service requirements of most lenders. Utilizing an SBA loan, the acquisition can be stretched out over seven or even 10 years. This lowers the payments and makes it easier for the borrower to hit the debt service targets of the lender.

    Stretching out the amortization of the loan also frees up additional cash flow for the new owner of the business. He or she may then use that cash flow to invest in marketing, implementation of new initiatives or adding a product line. Cash flow is king.

    In addition, long-term amortization can help with the ebbs and flows of business that inevitably arise. If you are in a downslope when a three-year conventional loan becomes due, the bank might put you in forbearance or impose monthly renewal fees. With the SBA, you have something in place long term.

    Is seller financing sometimes involved in a business acquisition?

    Yes, quite often. With SBA financing of a business acquisition, a seller’s note can be used as a portion of the required equity injection.

    Typically, lenders in a business acquisition scenario prefer a 25 percent equity injection from the borrower. This can be a tough requirement for many borrowers. If the seller agrees to hold back a note, and it is structured correctly, that note can be counted as part of the borrower’s equity injection, thus making it easier to come up with the needed equity.

    Also, the sellers are often sole proprietors or family businesses and they want to see their legacy carried forward. Keeping the seller engaged assists the buyer in making the transition and assures the bank there is a team in place that can make it longer term.

    What was the change the SBA made to its ownership rules and why?

    The SBA removed the liquidity requirement a few years back. Without that requirement, the SBA made it possible for businesses with owners who have strong liquidity to obtain financing through an SBA loan. Removing the liquidity requirement allows borrowers who may not have good liquidity to bring an equity partner who has liquidity to the table to help them get an approval.

    The reason the SBA made this change was to provide borrowers more flexibility in how they can structure their business when they seek SBA financing.

    When business owners use an SBA loan for a business acquisition, what do they need to understand about the lending process?

    Business acquisition loans are complex. Anyone who is considering utilizing bank financing for a business acquisition should engage his or her banker early in the process. Ideally, before you even start negotiating with the seller.

    Your banker can advise you on areas where you can be flexible in negotiation and areas where you need to be less flexible. He or she also can alert the buyer to some of the pitfalls to avoid.

    Since a lot of information will be needed from both parties, the sooner documents are provided, the easier the process becomes. Also, be sure there is open and honest communication from the start. Don’t leave any surprises to the end, or your financing can be delayed or compromised.

    Always make sure you are dealing with a lender who has SBA experience and a bank that is a preferred lending partner with the SBA.

    Equal Housing Lender. Member FDIC

    Insights Banking Finance is brought to you by Ridgestone Bank

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    SBA Business Course – Palo Alto Software #business #partnership

    #sba business plan

    #

    SBA Course

    In this webinar for the U.S. Small Business Administration, business planning expert Tim Berry helps entrepreneurs and small businesses better understand how to create a business plan.

    SBA s participation in this co-sponsorship is not an endorsement of the views, opinions, products or services of any cosponsor or other person or entity.

    All SBA programs, services and cosponsored activities are extended to the public on a nondiscriminatory basis.

    Use this form to request the certificate of completion after finishing the course.

    Reasonable arrangements for persons with disabilities will be made if requested at least two weeks in advance. You can contact our customer care team to make such a request.

    Co-sponsorship Authorization ##: 05-6010-71

    This website may contain hypertext links to information and websites created and maintained by other public and private entities. This information and these links are not owned or sponsored by the U.S. Small Business Administration and are provided for the user s convenience. The Federal Government or SBA is not responsible for the content, accuracy, relevance, timeliness or completeness of any websites or information that may be accessed from this site. Furthermore, the inclusion of such links does not constitute or imply an endorsement by the Federal Government or SBA of any organizations or company, or its opinions, products, or services. Please use caution and use your best judgment when considering a product, service or opinion offered by a linked website.

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