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Small Business Financing & SBA Loans

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A general overview of the newly expanded guidelines for SBA financing that the current administration now offers. Learn how to qualify your business for SBA government guaranteed financing.

A general overview of the newly expanded guidelines for SBA financing that the current administration now offers. Learn how to qualify your business for SBA government guaranteed financing.

Published in: Economy & Finance, Business

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  • 1. How to Expand or Start a Business with SBA Government Guaranteed Financing Presented by: Mortgage West Lane Adler, Broker Telephone: (818)-882-LEND (5363) http//www.mortgagagewest.net
  • 2. SBA Business Financing  Small Business Administration  Benefits of SBA Financing  Types of Loans Available  Allowable Use of Funds  Underwriting and Eligibility Issues  Other Financing Options  How to Apply  Questions and Answers
  • 3. Small Business Administration  Works in Partnership with the Bank  Encourage Banks to Lend to Business by Guaranteeing the Loan  Old Myths vs. New Process  Small Business Development Centers  Promote and Support Business Expansion  Established 1954  www.sba.gov
  • 4. Mortgage West Real Estate Financing  We Have Access to the Small Business Loan Exchange With 100 + Banking Partners available to you and Funding in all 50 states.  Our Managing and Regional Directors Have 30+ Years Experience in Many Areas of Financing, Including Commercial and Residential.  Our Goal: To Help Small Businesses to Increase Their Income and Save Money Through Government Guaranteed Financing.
  • 5. Benefits of SBA Financing #1 Benefit; Access to Capital  Longer terms 7 to 25 Years  Competitive Interest Rates  Easier Qualifying Guidelines  Lower Payments  Start up and Established Business’ OK  Low Down Payment, 10% to 30%  Can be Assumable, SBA Approval
  • 6. Available Loan Programs  7(a) Loans  Patriot Express  504 Loans
  • 7. Allowable Use of Funds  Start up Costs  Business Acquisition  Hard and Soft Costs  Partner Buyout  Working Capital  General Business  Real Estate Purchase Expansion  Equipment  Machinery  Franchise Purchase  Inventory  Refinance Existing  Payroll Debt  Advertising
  • 8. 7(a) Loans  Bank loans money, SBA guarantees up to 75% of the loan amount. (Currently 90%)  Loans up to $2,000,000, guaranteed loan amount is $1,500,000  Use for commercial real estate purchase, construction, improvements, debt refinance, equipment purchase, working capital, business expansion, revolving line of credit
  • 9. 7(a) Loans Terms and Fees  Minimum of 7 years; depends on lease  Equipment, 10 -15 years  Real Estate up to 25 Years  Fully Amortized, no Balloon or Call  Declining Pre Payment Penalty 5,3,1  Adjustable Rates, Prime + Margin or LIBOR + 3 + Margin  SBA Guarantee fee to 2 - 3.5% (Currently Waived)  Form 159 Packaging Fee, $2,500  Other Third Party Fees
  • 10. 7(a) Eligibility  Must be for profit and legal  Must be a small business; < $8 million net assets & < $3 million average revenue  For Real Estate must be 51% owner occupied, 60% new construction  Not a Felon  Citizen or Permanent Resident Alien
  • 11. What’s Not Eligible  100% Gaming, less than 20% of Revenue  All Lending Companies  Pawn Shops  Adult Business’  Apartment Complexes  Pure Investment Properties  Mini Storage
  • 12. Patriot Express  Same as 7(a) but for Veterans  Maximum Loan to $500,000  SBA Guarantee up to 85%  Fixed Term or Revolving Line of Credit  Disabled Vets, Current or Widowed Spouse,  Reservists and National Guard  51% Ownership
  • 13. 504 Loan Program  Real Estate Purchase or Construction and Expensive Equipment with 10 year Life+  Minimum is $250,000  Maximum Project Cost $8MM  50,40,10 Loan  Bank Lends 50%,SBA/CDC Lends 40%  Borrower Invest 10%  Must be Owner Occupied Property
  • 14. 504 Eligibility  Same as 7(a) +  No more than $8MM in net assets  Fixed 1st 5 years, Adjustable based on Index Flexibility- 3/1, 5/1 25 year amortization  Fixed 2nd 20 year Term  Prepayment Penalty on Both Loans
  • 15. 6 C’s of Underwriting  Credit  Capital  Collateral  Cash Flow  Capacity  Character  The Probability of Success.
  • 16. Loan Package Components  Business Plan  Tax Returns  Financial Statements  Use of Proceeds  Statement of Equity  Credit Reports  Supporting Documents
  • 17. Other Factors  Time in Business  Owners Cash Investment  Success of Industry  Resumes of Key Employees  Location Lease  A Bigger Package is Better  Compensating Factors
  • 18. Eligibility  Restaurants? Yes  Start up Business? Yes  Equipment Purchase? Yes  Practice Expansion, Partner Buyout? Yes  Land Purchase and Construction? Yes  Permanent Resident Alien? Yes  Working Capital? Yes  Real Estate Purchase? Yes
  • 19. Financing Options  SBA Loans $150,000 to $8 Million  SBA Revolving Lines of Credit $350,000  Commercial Real Estate Loans $52 Million
  • 20. How to Obtain Financing  Initial SBA Eligibility Consultation  Review Retainer Fee Agreement & Form 159  Complete Preliminary Application  Letter of Intent Issued  Complete SBA Application  Submit Documentation to Lender  Funding within 45 Days  Funds Received – Wire or Check
  • 21. Questions and Answers 1. Complete SBA Compliance Agreement 2. Schedule Appointment for SBA Eligibility Consultation Contact Lane Adler Telephone: (818)-882-9205 email: sba@mortgagewest