LOAN RESTRICTIONS FOR SBA LOANS

First to be approved by an SBA backed lender the client must be the owner at 100% ownership and must have made a substantial investment in the business. This normally means a 20% investment of your own money or assets.  You must provide a business plan, and income projections to your newly formed venture.  The business loan must be used to purchase equipment such as real estate (relating to the business venture), equipment, or renovation. All purchases must be well documented an approved before the bank releases the money.   There are a couple of business sectors that will run into a immediate disqualification. These include farms, schools, clubs, and franchises.  Also, an SBA backed loan can never be used to pay off debt, tax liens, or things not associated with the business.  If their are any type of tax liens or the SBA thinks the owners are likely to default because of bad financial decisions they will turn the loan down.

The only way to get an SBA loan is too be in the right industry and be able to put down 20% of your own money.  Also, you will need to write a business plan and have projections ready.  An alternative is to get an unsecured business loan or a unsecured start up business loan.  These types of loans don’t require any type of assets or collateral.  The money can be used for any purpose and any industry.  The problem with unsecured business loans and unsecured start up business loans is that to qualify you need a good credit score.  This usually means a 680+ credit without any type of bad marks on your credit.  However, the money can be deposited into your account within 7 business days.

TRICKING THE SYSTEM TO ESTABLISH BUSINESS CREDIT

If you have the available cash the best thing to do is go to the bank that invests in CD’S against loans. What this means is you give the bank your available cash, they invest in whats called a certificate of deposit which pays you around 3.5% and they issue you a loan of around 4-5% fixed.  You can have any type of personal score and be in any type of business. Right now in the economy a lot of industries and sectors are having a hard time getting financing at traditional banks.  These include the real estate and mortgage industry, restaurants, car finance, and retail.  Establishing business credit by getting loans against your deposits through a CD or even cash is the best way to get your business credit established.

OTHER WAYS TO ESTABLISH BUSINESS CREDIT

If you don’t have any available cash to invest the second best thing to do see if you have an asset to give up as collateral.  First, you have to find out whether the asset you own has a value and whether the bank considers it an asset. Most banks only do asset based loans on certain types of assets such as equipment or cars.  If you don’t have have any assets to give or if your assets are of no value to any bank or financial company then the third best thing is to get a unsecured personal loan or unsecured start up business loan. With these two types of loans you can get the capital in cash and turn it right over to the bank to secure a loan now listed under your business credit. The total amount of capital will be the same accept now you are starting to establish business credit.

WHAT HAPPENS IF I PAY MYSELF IN DISTRIBUTIONS?

A large amount of business owners pay themselves through distributions. What this means is they could potentially pay their house, cars, food, and living expenses  from profit from the company right into their bank account.  Underwriters dislike this even more because it gives the business owner more opportunities to lessen his tax base.

NON CASH FLOW BUSINESS LOANS

To the rescue is non cash flow related loans.  What happens with these types of non asset based unsecured business loans is a the bank examines the gross sales of the business, no financial are needed. These niche banks and lending institutions are going to look at the personal credit of the majority shareholder of the business (81% and higher) and then ask that person to sign a PFS or a personal financial statement. These banks realize that most businesses are going to write everything off whether its through a distributions or through regular accounting practices. They are looking at the personal credit off the individual because they realize that most financial decisions to pay bills and borrow capital will show up here.

Some of the biggest questions we get are How do i get the financing to get my business started? What are my options? Where do i start?

First lets talk about the SBA or the small business administration. The SBA is the government agency that is responsible  in making sure that small businesses  get the opportunity to thrive by providing help and by choosing certain banks to lend to them.

The SBA does not lend the money they guarantee the money to the bank in case the client defaults. The bank that underwrites the file will have to stick to certain guidlines the SBA enforces.

To get an SBA loan for a start up business whether is an SBA 7a, SBA express, or SBA 504 you will need a minimum of 20% down. The SBA requires the 20% down to insure that the client has a real interest in making his or her new business profitable.

So what are the advantages of the unsecured loan for start up loans?

The biggest advantage of the unsecured start up business loan is it doesn’t require any type of assets. To get an unsecured start up loan all you need is a high credit score preferably a 680+. You don’t need a business plan and you don’t need any type of business projections. You are getting this type of loan based solely on your credit. Most unsecured start up business loans take 7 days to complete and can be used for anything. One of the biggest advantages is that unsecured start up loans can be done as a no doc, light doc, or full doc. They will not require the mountains of paperwork required for an SBA loan.

 
OTHER OPTIONS
Bankers and loan providers are divided into different sections based on whether they are public or private, their stocks, their board of directors and how adverse they are to risk. A lot of small mom and pop shops have sprung up to assist clients with debt consolidation. They need capital to grow and they have a certain niche that they market too.
Some of them only accept people in certain areas of the country while some only loan to clients with certain occupations or affiliations. For more information on our personal loans contact us at 888-294-2584.

NO DOCUMENTATION LOANS ARE NOT DEAD

Because of the way banks are chartered there are a few niche banks that will put the loan only under your EIN # with a personal guarantee. The key is you have to be in the right industry. There are  some industries where its harder to get a business loan but there are a few banks that will finance these type of industries. People in the real estate, mortgage, and construction business will have a rougher time  getting the loan. The banks that specialize in no doc business loans understand that in many industries  people make a lot of money but because of their industry they have a lot of write offs and don’t show a lot on the books.  Some of these banks will add back depreciation and amortization while some of them will use your gross sales no matter what you show.  In the end going to the right bank will save you money on the rate which equals big savings over the life of the loan.

For information on our products call us direct at 888-294-2584

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DIFFERENT TYPES OF BANKS

All banks and lending institutions are monitored and controlled somewhat by the federal and state government and their corresponding agencies. However, with 2000 plus banks throughout the United States each bank operates differently according to whether they are publicly listed, their internal business structure (CEO, CFO policy’s) and what type of industry they like to lend to. Other reasons why some banks are lending and other aren’t are what their internal books look like and their aversion to risk.

TWO DIFFERENT WAYS TO GET START UP CAPITAL

The 2 different ways to get capital is either through a secured loan or an unsecured loans. The secured loan mean your will put something up for collateral such as a house, car, or equipment. You have to have equity or trapped value in what your putting up or the bank won’t accept it. The unsecured loan or unsecured line of credit may be the better way to go. Most of the time you need a minimum of a 660+ credit score. There are 3 different type of credit scoring systems Equifax, Experian, and Transunion. All three of these companies compute your scores in different ways and different banks use one, two, or all 3 scores to determine your ability to pay back the noted.

Once you decide whether you can go secured (asset based with equity) or unsecured (you have the credit to sign or know someone that does) you have to decide how much money you need for initial costs as well as ongoing costs before you start to make a significant profit. The amount of money you will receive in financing as well as the interest rate and the bank will determine whether starting your own business is a feasible option.

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OPTIONS FOR HOME BASED BUSINESS FUNDING

Our company works with over 1500+ banks and there are a few select choices when it comes to funding a home based business. We have access to not only your FDIC insured banks but also pension fund investors, angel investors, credit unions, niche money funds as well as individual investors.

ACCESS TO CAPITAL

The capital that you will receive will be based on about 25 different factors that we will go over with you. Our consultation is free. Some of these factors include what business you are trying to start, your experience in that field, your location, your credit and local economic data. If you are interested in a free consultation fill out the quick application below or call us at 888-294-2584.
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