CARTOONS BY CHRIS BRITT
StartUp_Wisdom_online2
StartUp_Wisdom_online2
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– SMALL BUSINESS ADMINISTRATION –<br />
LOANS<br />
The Small Business Administration<br />
(SBA) doesn’t really make loans. Rather,<br />
they guarantee up to 90% of a loan a<br />
lender would make, if the loan meets<br />
specific requirements. Many of the loans<br />
offered by the SBA require collateral from<br />
the borrower, but the SBA’s guarantee<br />
limits the risk for lenders. Because loans<br />
have to be collateralized, the lender will<br />
require liens on all of your business<br />
equipment, inventory and receivables<br />
along with your personal residence, in<br />
most cases. The SBA loans for real estate<br />
Education is what you get from reading<br />
can be amortized over 20 to 25 years<br />
the fine print.<br />
which can lower monthly payments. The<br />
two most popular programs are CDC/504 and 7(a) program.<br />
HOW DOES IT WORK?<br />
Though programs can vary, here are the basics to qualify:<br />
• Credit score. 660+ FICO score for all primary business owners. In many cases, you<br />
will need to personally guarantee the loan.<br />
• Down payment. Typically you will need a down payment of 20 % or more if you’re<br />
using the loan proceeds to purchase a business or real estate.<br />
• Collateral. These loans must be fully collateralized, so the more collateral options you<br />
have, the easier it is to get qualified for an SBA loan.<br />
• Time in business. Generally, lenders are looking for a minimum of two years in<br />
business. There is an option for startups which would be the SBA 7(a) loan.<br />
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