Ask for at least 30% more than you really need. Collateralize to match as much as you can, but at
least 70% of the loan amount you request. Why? Quite a few SBA loan packages I've done, either for
my own businesses or clients, have resulted in loans less than what was requested. What can be collateral?
Dont put your home up as collateral. I make this recommendation to everyone. You can do it without
risking your home. You can borrow the collateral as well.
In your package, both the bank and the SBA will look for equity investment from sources other than
you and any partners. Certain family members and friends can help you qualify here. My experience
with the SBA and loans from $75,000 to $750,000 are that they like to see equity investment of 20%
already made or made contingent upon receiving the loan. I have borrowed or engaged investors in pledging
collateral to help get a loan. Examples of things that can be pledged are stock, bonds, insurance
policies, land, investments, and property.
While in recent years the SBA and the banks have attempted to make the process easier and faster,
you can only expect a positive result if you are completely prepared when you apply. If you have a
good relationship with your bankers, they can be a good resource to help you. I have had bankers tell
me exactly what they want to see to say yes. It doesnt hurt to ask. If you get a "no",
dont accept it, ask why and what you can do to bolster the package to make them say yes.
Tenacity can be a great ally as well. If it's feasible, make personal contact with the "loan
chief" at the closest SBA district office and get to know each other. This serves the same purpose
as having a good relationship with your bank. If both the bank and the SBA can put a face and a feeling
with your loan package, youll have a very strong leg up in the process.
Don't wait until youre hungry before you start planning to eat. In other words, prepare well
in advance of needing the money youre asking for. The process can take a great deal of time
or a relatively short time. Ive seen loan packages take as long as a year to get approved, and
Ive seen large loans approved and funds dispersed in thirty days. It all depends on the deal,
the loan request, collateral, the business, and the management. The better prepared you are, the better
armed with the right information and all the elements that you know in advance will be required, the
better your chances will be.
As to your inquiry for sources to forward your business plan to, I'd suggest you look for your local
Department of Commerce Small Business Assistance contractor. Your SBA office will be able to direct
you to this firm. The DOC funds contractors in most major cities whose function is to help small businesses
obtain SBA loans. Generally, they charge minimal fees, as they are provided funding by the government
for the services they provide. Most charge $25 per hour or less. If you dont have a relationship
with the local SBA, they do and theyll likely help you with introductions and their insight into
what is required to get your loan.
Lastly, look into Small Business Investment Companies (SBICs). SBICs are approved by the SBA to make
loans to small businesses. Most SBICs are investment banks set up by regular banks to help people with
SBA loans.
Copyright 1995-2024, Idea Cafe Inc. Downloads are for personal use only, not for resale to others, and may not be reprinted in any form without written permission from Idea Cafe Inc.
DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.