Even as the economy begins to turn around, banks remain hesitant to extend credit to small businesses. Â After a lengthy application process and rigorous audit of the business’s financial documents, many business owners are coming up short in finding the capital they need to grow their business. Â Without stellar credit and healthy financials, your chances of getting access to capital from traditional funding sources are slim.
Many retail business and restaurant owners have turned to the business cash advance as an alternative. Â The cost of the funds is typically higher than what banks would charge, but it comes with certain benefits:
- The application process is very simple. Â There is minimal paperwork required. Â Pre-approvals can be provided within 24 hours, and funding often takes place within 5 – 7 business days.
- Approval rates for qualified applicants are as high as 90%.
- Good personal and business credit isn’t required.
- There is no  need to pledge any assets or collateral (business or personal) in order to secure funding.
- The methods by which advances are paid back make repayment very flexible. Â A percentage of the business’s future credit card sales, typically between 10% and 20%) are withheld by the merchants credit card processor and applied towards the balance of the advance. Â A slow month in credit card sales results in a lower amount paid back towards the advance. Â This makes it easier to cope if business slows down a bit.
- Businesses typically qualify to receive an additional advance before the first advance is entirely paid off. Â This varies case by case, but once the balance is down to about 50%, many merchants qualify for additional funds.
There are many merchant cash advance providers out there.  Each has their own strengths and weaknesses.  Companies like Sure Payment Solutions are able to find the right match for each business based on each owner’s particular situation and needs.  Visit www.surepaymentsolutions.com. to learn more.
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Our management team has a combined 20 years of experience in the merchant funding and credit card processing space.
General |
Posted by Benjamin Sabin
Jun
23
2010
You may be aware of this, but there a number of firms that can actively assist you as you looking for business loan. These firms are commonly known as loan brokerages. They work in a very similar capacity to that of a mortgage brokerage firm but with a specific focus on business loans. However, before engaging a business loan brokerage you should be aware of a few things. Like with any industry, there are a number of unscrupulous firms and individuals that seek to take advantage of people that are not privy to how the industry works. In regards to loan brokerages, you should be wary of any firm that requires substantial upfront fees before assisting you with obtaining a business loan. However, some of the fees presented by a loan brokerage can be reasonable. For instance, fees for business plan development and credit reports should be reasonable while several thousand dollar retainers for simply taking on a project are not. When working with a business loan brokerage you should always perform your own due diligence. Does this firm have references? Are they are member of the Better Business Bureau? What is their success rate?
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Once you find a firm that you want to work with when looking for business loan then it is time to begin negotiating the fees. Typically, most business loan brokerages charge a fee ranging from 2% to 10% of the successfully raised capital. Again, this is subject to negotiation. If you have a substantial amount of collateral, an excellent credit score, and a solid business plan then the fees should be lower as your chances of obtaining a business loan are much higher than people that do not have the same qualities.
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One of the pros of working with a business loan brokerage is that you can quickly receive a number of loan offers from a number of banks and lenders within days of submitting your formal application. Additionally, the business loan brokerage can assist you immensely with developing the appropriate application and business plan so that your business loan request can be processed faster than if you did it on your own.
One of the primary negatives to working with a loan brokerage is that they can charge substantial fees for their services. However, these fees can be justified if the loan brokerage is legitimate and able to secure a business loan on your behalf.
General |
Posted by Benjamin Sabin
Jun
12
2010
According to the Small Business Administration, companies that can qualify for the 7a SBA loan must meet certain small business size standards. These standards vary greatly by industry, but the general rules of thumb are as follows:
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Farming businesses must not have revenues exceeding $750,000
Building contractors can have a maximum revenue of $14,000,000
Retail and service businesses can have maximum revenue of $7,000,000
Heavy construction trades and industries have maximum revenues of $33,500,000.
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Additionally, there are headcount tests regarding the number of people that work for your business. For wholesale trade industries, the maximum number of employees is 100 while manufacturing firms can have a maximum of 500 employees. However, these rules are not hard and steadfast. The SBA and its associated lenders understand that revenues can fluctuate as can the personnel summary of your firm. As such, it is imperative that you speak to you 7a SBA loan representative to determine whether or not your meet the standards discussed above. However, as many entrepreneurs seek to use this type of credit facility for starting a new business then the standards discussed above typically do not apply to your business. If your business becomes highly successful and requires additional capital then you may start to require traditional business loan financing rather than debt through programs like the SBA 7a Loan.
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It should also be noted that based on inflation and industry trends, the Small Business Administration regularly reviews and updates its business eligibility standards based on revenues and personnel numbers of businesses across a number of different industries. If you are having trouble determining whether or not your existing business qualifies for a 7a SBA loan then you should speak directly to a SBA representative, your banker, or your accountant.
7aSBALoan.com is a specialty website that provides content that focuses on the needs of small business owners and people seeking SBA 7a Loans. We encourage you to visit our website if you are looking for a
General |
Posted by Benjamin Sabin
May
14
2010
An SBA business loan is a debt instrument provided by you to by a lending institution that has been guaranteed by the United States government through the Small Business Administration. Many entrepreneurs wrongly think that it is the federal government that grants the loan. This is not the case. With an SBA loan, the government essentially acts as your cosigner for the loan. In the event that you default on the business loan, the US government will provide the bank with a reimbursement for the loan. As such, banks love to make SBA loans as they present very little risk to the bank, provide small business owners with the capital that they need, and increase activity in community bank branches – all while making a nice profit for themselves.
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Applying for an SBA business loan is a difficult process despite the fact that the only limitations regarding who can apply is that you must be of good moral character (ie. no criminal record) and an American citizen. You should be immediately aware that receiving approval from the SBA to receive a loan is a difficult process and can take anywhere from 45 to 180 days depending on how well you have prepared the appropriate documentation and business plan for the business loan.
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The documentation required to obtain a business loan that is backed by the SBA is significantly larger than that of a conventional business loan. Additionally, there are several different SBA loan programs that are available to you depending on your borrowing needs. These loan programs include, but are not limited to:
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SBA 504 Loan
SBA 7(a) Loan
Express Program Loans
Military Veteran Business Loans
Rural Business Loans
Micro Business Loans
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When determining which SBA loan is right for you, you should always consult with a properly trained accountant or financial advisor that can take into account your entire business and personal financial situation.
General |
Posted by Benjamin Sabin
May
12
2010
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In addition to filling out the 7a SBA loan application, you will also be required to present your lender with a business plan that explains what you intend to do with the loan funds, the anticipated financial results of your business, and what service/product your company offers. According to SBA lending professionals and experts, your business plan is about 33% of the ultimate decision of whether or not to lend to a small business.
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As we have discussed in other articles, if you have having trouble developing your business plan then you may need to hire a business plan consultant that can assist you with this process. This is especially important if your small business operations on a more local basis as local demographic research, local competitive analyses, and local economic analyses will need to be completed. Banks and finance companies, given the current economic climate, now always verify the information in full on any given loan submission document including the business plan and formal loan application.
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There is no wrong or right way to write a business plan. However, any business plan that you create should have the following components according to the SBA:
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A detailed executive summary
An overview of the Owner(s) of the business.
The anticipated financial results for the business over a three year period.
Usage of 7a SBA loan funds.
Personnel overview and an overview of the corporate organization
A highly detailed marketing plan
A description of the products/services that are selling to the general public.
Previous operating history (if available)
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In the even that you are seeking to acquire an already established company then you should have that business owner provide you with all of the necessary financial documentation related to the previous operations of the business so that it can be put into your business plan. A certified public accountant will be able to do this for you if you are unable to do so on your own.
7aSBALoan.com is a specialty website that provides content that focuses on the needs of small business owners and people seeking SBA 7a Loans. We encourage you to visit our website if you are looking for a
General |
Posted by Benjamin Sabin
May
09
2010
One of easier ways of becoming an entrepreneur is to acquire a business that has already been established by someone else. The risks related to acquiring a business are significantly lower than starting a business from scratch. Established businesses already have customers, an operating history, and hopefully profits as well. Additionally, obtaining a business loan for the acquisition of a business (while more paperwork) is usually easier than obtaining financing for a startup. This primarily due to the fact, again, that the risks are lower.
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The 7a SBA loan can be used for business acquisition purposes. As we have discussed before, the flexibility of this loan can allow you to finance varying parts of the acquisition differently. Prior to applying for a SBA guarantee, you should see if the business for sale has been preapproved for a SBA loan. If a business broker is involved then the broker may have acquired pre-approval from the SBA so that the transaction can happen more quickly. Additionally, a business broker will have generally assembled much of the paperwork required by the bank and the SBA in order to render both a lending and a guarantee decision.
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From time to time, business owners that are selling their businesses will already have a business plan in place showcasing the necessary components of the business and the owner’s anticipation of how the business will grow over the next three to five years. This business plan is generally modified by the incoming owner based on the ideas that the new owner will implement once the business has been acquired.
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Whenever you intend to acquire a business, it is imperative that you complete your due diligence. Prior to applying for a 7a SBA loan, your accountant should thoroughly review the profit and loss statements, cash flow statements, and balance sheet of the prospective business to ensure that they are factually correct and match the business’ tax returns.
7aSBALoan.com is a specialty website that provides content that focuses on the needs of small business owners and people seeking SBA 7a Loans. We encourage you to visit our website if you are looking for a