The Myth
"...As this economic recession began with the collapse of a bunch of big financial firms which in turn caused the total freeze of the credit markets, the consequence for us, small business owners, is that it became extremely difficult to borrow money. No more credit, no more loans."
The Truth!
We don't deny that now it is more difficult to be approved for a loan, but there are many business owners that are finding ways to get cash into their businesses. How are they doing this?
The most important factor in a loan approval is proof that a business can generate the cash to repay the loan. This proof has to be realistic, grounded in solid assumptions and based on the numbers.....the business financial projections for at least three, if not five years in the future. This is where we can help. We have over 40 years experience dealing with bankers and we know what they like to see. Obviously we won't invent what doesn't exist, but if your business has a viable strategy, we will show it in the numbers.
Here is a brief list of different types of loans that are available for specific applications:
. Account Receivable Financing
. Factoring
. Asset Based Financing
. Inventory Financing Loan
. Equipment Financing Loan
. Merchant Cash Advance
. Line of Credit
. SBA loans (secured and unsecured)
The American Recovery and Reinvestment Act of 2009 has also enriched the traditional SBA loans with new rules and new loans, such as the ARC . For example, the SBA guaranty, in certain cases, has increased up to 90% ( from 75%), so that the lender risks only 10% of the amount disbursed.
You can get complete information on the SBA loans at www.sba.gov/services/financialassistance . Here is a brief outline:
. Microloans- Are up to $ 35,000 to small businesses for working capital or purchase of inventory, equipment etc. SBA loans are handled by an intermediary which in Portland is the OAME , which in turn makes the microloan. Businesses need a simple business plan for the application.
. SBA Express- Maximum loan amount $ 350,000- Maximum SBA guaranty 50%- Must be secured by collateral if the loan amount is more than $ 25,000. Turnaround time: two days.
. Patriot Express- same as above but business must be owned (51% minimum) by a veteran. Max loan amount $ 500,000 and max SBA guaranty 75/85%
. Basic 7(a) loan program- Maximum loan amount $ 2 million with maximum SBA guaranty of 75% (85% for a loan amount of $ 150,000 or less). This is the most common of all SBA guaranteed loans. Any 20% or more owner must sign as a co-guarantor. It must be processed through a lender, called the participant (just as the two previous loan types). There are several eligibility criteria, but the most important is the proof that the business is sound and has the ability to repay the interest and capital. Also collateral, or the assets owned by the business owner, will be taken into account. In any case, the applicant must satisfy the lender's lending criteria. Keep in mind SBA is not lending any money; it's only providing a guaranty. Maturity varies, but in general can be up to 25 years if the loan amount is used for acquisition of real estate or machinery, 7 years for working capital.
The team at Synergic can helps you to go through the loan application process, from researching the loan and the right lender, to preparing the business plan. We will literally accompany you to meet the loan officer and present the application, helping you to answer all the questions. And we always operate within our clients' budget.
