Have a question about small business loans?  Click here to ask!

Questions & Answers.

  Question – Can I Use My Home Equity To Finance A Business?     Our Response – If you own a home and have built up equity, using a home equity loan to finance a business is an option.  Now many people don’t want to consider this option because they say – “I don’t want to get a home equity loan for my business because I don’t want to risk losing my house if the business fails.”  While this is a legitimate worry, the fact in most cases is that when you go to the bank for a business loan and you ...

Read More

  Question – What are the SBA’s collateral requirements?     Our Response – Even though the SBA provides a guarantee to the bank, there are still SBA collateral requirements to get a business loan.  Collateral is an additional form of security which can be used to assure a lender that you have a second source of loan repayment. Assets such as equipment, buildings, accounts receivable, and (in some cases) inventory are considered possible sources of repayment if they can be sold by the bank for cash. Collateral can consist of assets that are usable in the business as well ...

Read More

  Question – What is the best business loan for a minority woman?     Our Response – There were a handful of loan and loan guarantee programs about a decade ago that have since mostly been phased out that targeted women and minority businesses from various state and federal agencies.  These programs were typically nothing more than a rebranded version of a program they already had in place.  There are still a few programs in existence that are targeted for women and minorities.  These are typically state operated micro loan programs, such as Georgia’s woman owned business loans program. ...

Read More

  Question – What is an SBA loan and would I want one?  I hear that term a lot when looking for small business financing but not sure why I would want the government more involved in my business than it already is.     Answer – In some cases you don’t want or need an SBA loan.   First off, let’s dispel a common myth about SBA loans. The SBA does not directly provide financing with the exception for their Disaster Loan. What the SBA does is provide assurance to the bank that if the business owner defaults, the bank ...

Read More

  If I am applying for a business loan, what type of information does the bank usually ask for?     Our Response – When applying for a business loan there are a number of forms and documents to fill out for the bank.  While the information required may vary by bank, here are a number of items that are typically required:   Personal background and financial statements Business financial statements (income statement & balance sheet – if the business is already open) Last 3 years of business tax returns (If the business is already open) Projected financial statements (Banks ...

Read More

  Question – I am interested in purchasing an existing, successful business from my current employer.  I have talked with my bank and even though I have cash to put into the deal, his concern is the lack of collateral.  The current owner is retaining and then renting the business real estate and business equipment is minimal. Since this is essentially an unsecured request, would an SBA Advantage 7a work?     Our Response: SBA’s written policy regarding collateral has two parts: When a loan guaranty is approved, the SBA would expect all existing business assets collateral. After exhausting business ...

Read More

  Question – There was a bar that closed in my town due to the owner’s health and has been closed for over a year.  The owner did not keep good records and it showed a loss for the earlier years he owned it.  I feel like no bank is going to finance this adventure without a profit loss statement proving that the business made money, so I am pursuing a possible lease option with the owners for one year to create my own profit and loss statement  with option to buy after one year, but I probably will need ...

Read More

  Question – I have the opportunity to purchase a building next door to our current facility at a significant discount to what I believe it’s worth.  If the appraisal is higher than purchase price can I borrow additional money through that additional equity?     Our Response – In most cases the answer is no. Having additional value in the building is great but most banks will only lend up to the sales price. Banks will however, typically allow a refinance on property two years after purchase at which point they lend against the appraised value.      

Read More

  Question – If I Incorporate but Go Out of Business, Do I Still Have To Pay Back My Loan?     Our Response – The short answer is yes.   When you create an LLC you get liability protection.  If someone sues your business and you weren’t negligent your personal assets are safe, but this does not apply to paying off debts in the event of a business failure. Almost every bank is going to require a personal guarantee for any person with a 20% or more ownership position in a corporation or LLC.  There are loans called non-recourse ...

Read More

  Question – I am in the process of purchasing a laundromat and to develop my company further i need huge loan-FAST! Is it possible to acquire quick accessible money to finance a laundromat and be able to build my credit at the same time? My business requires a large sum of money, do you think i’ll be able to get this amount in a reasonable amount of time?     Our Response – I’m not sure what you consider a huge loan but there are a few things to think of.  Without knowing anything about the project I assume ...

Read More

  Question – I have had an opportunity come by me that is a great chance to be my own boss…A liquor store for sale listed at 650000 + inventory which is running around 400-450k estimated.  My question is can a SBA loan be used for a liquor store? How much will I need to put down? and Will the SBA loan cover inventory?  It has a strong cash flow back to the owner.  For me I have a great operations background as well as liquor and restaurant experience, but do not have a clue when it comes to financing ...

Read More

  Question – I have worked for my father my whole life (30 yrs) in the manufacturing field. I am currently the office manager of his company which he is in partnership with 1 other person. He would like to retire as soon as possible and there was talk at one time of me buying his portion of the business but I have no collateral or available funds to do that. Once sold he is going to stay on for a year as a consultant The business is profitable and always has been and the future looks the same. My ...

Read More