Choosing the right small business loan isn’t as difficult as it seems, though. When you apply for a loan with Merchant Advisors, one of our expert financial advisors will work with you every step of the process. He or she will discuss all your loan options, assist you in collecting the necessary documents, help in estimating how much cash your business needs, and keep you informed throughout the life of your loan to help you with loan renewals, terms adjustment, and make you feel relaxed and contented.
SBA loans are backed by the U.S. Small Business Administration and issued by participating lenders, mostly banks. They are coveted by small business owners because they come with low rates and flexible terms.
Young, ambitious and willing to make a bet on your future earnings? Consider how Kjerstin Erickson, Saul Garlick and Jon Gosier are trying to raise money. Through an online marketplace called the Thrust Fund, the three have offered up a percentage of their future lifetime earnings in exchange for upfront, undesignated venture funding. Erickson is willing to swap 6 percent of her future lifetime earnings for $600,000. The other two entrepreneurs are each offering 3 percent of future earnings for $300,000. Beware: the legality and enforceability of these “personal investment contracts” have yet to be established.
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8. This week I got a call from a person by the name of Danny from a debt collector in New York called “Conserve”. He informed me that he was a debt collector for the Treasury and that I owed $512,348.20 and needed to make arrangements for payment.
Small businesses in industries that have periods of boom and bust every year (in other words, busy seasons and slow season) often face cash flow problems when business is entering the busy season. They needs to hire workers and buy materials but likely won’t be paid for their work for 30-90 days. The SBA CAPLines allows small businesses grow as fast as possible and not run into cash flow issues.
The U.S. Small Business Administration has a microloan program that offers up to $50,000 for small businesses and some not-for-profit child care centers. The average SBA microloan is about $13,000. Here’s a list of providers.
Ms. Watson, the first in her family to go to college, took out private loans to finance her studies. But she said she had trouble following the fine print. “I didn’t really understand about things like interest rates,” she said. “Everybody tells you to go to college, get an education, and everything will be O.K. So that’s what I did.”
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
• Your business also needs to meet lender qualifications. After determining that your business meets the SBA qualifications, you need to apply for a commercial loan — and the qualifications for that are often more arduous. “To secure an SBA loan, you must to submit a loan application to a bank, credit union, or other financial company that processes SBA loans,” says Jim Anderson, a management counselor for Orange County SCORE, a nationwide non-profit small business mentoring and training association, and a former management consultant who spent time working for Honeywell and the Ford Motor Co. “You will not directly secure the loan from the SBA; the SBA makes loans available through participating vendors and provides a government guarantee to the lenders. The SBA has designated some lenders as ‘Preferred Lenders’ that can approve loan requests on behalf of the SBA, which may expedite the loan process.”
How is the SBA 75% guarantee calculated? Is it based solely on principal & interest left after a foreclosure or can other fees be included ? Can the bank collect late charges, foreclosure fees, etc. from the SBA if the principal and interest are paid by the borrower?
SBA Business Physical Disaster Loans (BPDLs): Long-term, low-rate loans designed to help businesses that suffered physical losses and damages due to a declared disaster replace or repair that property not covered by insurance. Do not need to be a for-profit business.
The type of loan you’ll require through the SBA loan program is going to greatly depend on what you plan on using the funds for and what collateral you potentially have to put down. The majority of businesses looking for working capital, or for funds to buy a business, are going to find the SBA 7a loan as their best choice. Knowing nothing else other than the fact you’re a construction company, I would say you should look into the 7a loan. However, knowing more about your business and the use of funds will help you get a more defined answer. Good luck!
• Meet with lender(s). You (and your advisors) should dress in a professional manner, as it is important for the lender to get an immediate positive impression, Anderson says. After a brief introduction, you should present the lender with two copies of your business plan, including your financial projections. You should discuss your business including the loan you are requesting (a formal written presentation is not required). The lender will ask questions and you should be prepared to provide detailed information in response. “Make the lender feel comfortable doing business with you,” Anderson says. If the lender is comfortable with the relationship, s/he will provide you with an SBA Loan Package that includes forms required by the SBA and information the lender requires. (SBA loan applications from different lenders are similar, but can vary.) One such form is authorization for the lender to access your personal credit reports — it is generally wise to minimize the number of such authorizations, as each time a lender checks your credit it will impact your FICO Score.
SBA Microloan qualifications will vary from intermediary to intermediary. Unlike most of SBA loan programs, the SBA leaves qualifications up to the intermediary which set all eligibility requirements and make all credit decisions.
Either way, the advantage of going online is speed: Most lenders can get you your money in a week or less. Applications are typically much less time-intensive, too. Of course, the major drawback is that your interest rate will be higher. It’s common for small businesses to secure bank loans with single-digit APRs. While that’s possible online, double digits are more the norm.
LendingClub is America’s largest online credit marketplace with over $20 billion in funds issued. With us you get the financial strength of a publicly traded financial institution(NYSE: LC) but the dedication and attention of a local business.
• Special Purpose Loans Program This category includes help to businesses for a range of reasons, from negative impacts from the North American Free Trade Agreement to helping implement pollution controls to providing assistance to Employee Stock Ownership Plans.
Jeff White is a staff writer and financial analyst at Fit Small Business, specializing in Small Business Finance. As a JD/MBA, he has spent the majority of his career either operating small businesses (in the retail and management consulting spaces) or helping them through M&A transactions. When he is not helping small businesses, he spends his time teaching his five kids how to become entrepreneurs. Jeff lives in Seattle, Washington.
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While Mr. Uderitz wants to collect money from students behind on their bills, he says he wants the lawsuits against borrowers to stop, at least until he can get more information about the documentation that underpins the loans.
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