CARTOONS BY CHRIS BRITT

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There are several different SBA loan products. • SBA Express Program. If you are looking for a quick turnaround this one is it. You can usually get approval within 48 hours. It can be used for equipment purchases, expansion, owner-occupied real estate purchases, working capital and more. Not only can you get a quick response, but you can decide between a fixed and variable rate with loan amounts up to $350,000. • 7(a) Loan Program. This program can be used to purchase new equipment, real estate for an expansion or working capital. You can borrow up to $5 million with either a fixed or variable rate along with better loan terms. In the first quarter of 2016, in Washington banks made almost 200 loans for a total value of $78.5+ million. • 504 Loan Program. For businesses looking to buy real estate or equipment, this program can finance up to 90% of the purchase or renovation cost. You can borrow up to $12 million with either a fixed or variable rate. • USDA Loan Program. Businesses in rural areas can qualify for favorable terms and interest rates. Just check online at the SBA website (http:www.sba.gov) to see if your location qualifies. • The Small Loan Advantage Program. Offers loans of up to $250,000 with interest rates typically equal to the prime rate plus 2.75%. It’s geared toward businesses in underserved markets. • Community Advantage. If your business serves a lower-income community, you may qualify for the Community Advantage pilot program, which also guarantees loans of up to $250,000. The program’s loan rates vary, but they’re generally about prime plus 4%. ADVANTAGES High loan to value. You may be able to borrow up to 90% of the loan’s value for real estate purchases for your business. Guaranteed loans. Your loan is backed by the SBA so lenders will be willing to take more risk than normal, potentially saving you money. Longer terms. You can often get up to 25 year terms for commercial real estate mortgages. This can save you money and lower your payments without the normal balloon payments that often accompany traditional commercial loans. 50
DISADVANTAGES Time consuming. On average, SBA loans can take longer to finalize, up to two additional weeks in many cases. 100% collateralization. You are required to collateralize the loan up to the entire borrowed amount. This means that your business inventory, receivables, equipment and home can be on the line if your business is unable to repay. Prepayment penalties. You must make sure you read the small print that discusses prepayment penalties. The penalties vary by loan program but each may have a prepayment penalty that can cost you money if you want to pay off the balance owed early. SBA LOAN EXAMPLE Anish operates a successful market in his neighborhood. His sales have increased year in and year out over the last five years and his customers have been asking for a service counter for fresh meats and seafood, which means an expansion. After reviewing his options, he decides to apply for an SBA Express Program loan that can be used to purchase equipment and finance expansion. He applies for a $320,000 loan, putting his business receipts, equipment and home up for collateral. The lender agrees to finance the loan for 3.5% above base for 10 years and Anish gets his loan approved in 36 hours so he can start work on the new footprint for his business. 51
Page 1 and 2: CARTOONS BY CHRIS BRITT
Page 3 and 4: STARTUP WISDOM 27 Strategies for Ra
Page 5 and 6: CONTENTS Bootstrapping. ...........
Page 7 and 8: - INTRODUCTION - As an entrepreneur
Page 9 and 10: - BOOTSTRAPPING - Bootstrapping is
Page 11 and 12: - CREDIT UNIONS - While banks may b
Page 13 and 14: - REWARD CROWDFUNDING - Crowdfundin
Page 15 and 16: Momentum. The more backing and inve
Page 17 and 18: - EQUITY CROWDFUNDING - Congress pa
Page 19 and 20: DISADVANTAGES Resource intensive. A
Page 21 and 22: - PEER-TO-PEER LENDING - There are
Page 23 and 24: DISADVANTAGES The money isn’t gua
Page 25 and 26: - COMMUNITY SOURCED CAPITAL - The c
Page 27 and 28: - PREPAID SALES - With prepaid sale
Page 29 and 30: - ANGEL INVESTORS - A century ago,
Page 31 and 32: DISADVANTAGES Investor expectations
Page 33 and 34: - VENTURE CAPITAL - Venture capital
Page 35 and 36: DISADVANTAGES Give up control. The
Page 37 and 38: - LOCAL INVESTMENT OPPORTUNITY - NE
Page 39 and 40: DISADVANTAGES Private transactions
Page 41 and 42: - FACTORING - If your company has r
Page 43 and 44: - HOME EQUITY - This type of loan a
Page 45 and 46: DISADVANTAGES Loss of assets. If yo
Page 47 and 48: - PARTNERSHIPS - Partnerships lever
Page 49 and 50: PARTNERSHIPS EXAMPLE Jacob and Sylv
Page 51: - SMALL BUSINESS ADMINISTRATION - L
Page 55 and 56: - MICROLOANS - In the banking indus
Page 57 and 58: - RETIREMENT ACCOUNTS - If you’re
Page 59 and 60: - LIFE INSURANCE - Life Insurance c
Page 61 and 62: LIFE INSURANCE EXAMPLE Home economi
Page 63 and 64: - VENDOR FINANCING - If your compan
Page 65 and 66: - LEASING - Equipment can suck up c
Page 67 and 68: - GRANTS - A grant is money that is
Page 69 and 70: - BUSINESS PLAN COMPETITIONS - If y
Page 71 and 72: BUSINESS PLAN COMPETITION EXAMPLE E
Page 73 and 74: - “FARMER’S” MARKETS - These
Page 75 and 76: FARMER’S MARKET EXAMPLE CB’s Nu
Page 77 and 78: - LEMONADE STAND - Don’t laugh. S
Page 79 and 80: DISADVANTAGES Bad weather. One thin
Page 81 and 82: - MICROENTERPRISE DEVELOPMENT - Des
Page 83 and 84: - INDIVIDUAL DEVELOPMENT ACCOUNTS -
Page 85 and 86: Not available everywhere. IDAs aren
Page 87 and 88: - SHARK TANK - Okay, so we made fun
Page 89 and 90: DISADVANTAGES Be prepared. The shar
Page 91 and 92: - THE LOTTERY - Sure you could play
Page 93 and 94: AUTHORS AND ARTIST Maury Forman is
Page 96: Startup Wisdom Reviews . . . If you

CARTOONS BY CHRIS BRITT

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