Business Loans

If either you are starting a new business or trying to update an existing one, you will most likely need a source of funds to do so. If you are not able to fund it yourself, you will find yourself in a position of having to apply for a business loan. Most American entrepreneurs consult with the SBA for that purpose. SBA stands for Small Business Administration and was created to assist small to medium American entrepreneurs. It not only helps in getting your finances organized but it also provides advice to small and medium companies. In case you need a business loan, the SBA can also help you getting the funding from a partner financial institution.

Although the SBA does not provide business loans directly, it can put you in the right track and help mediate the proceedings. If you own a small business you can apply for an SBA guaranteed business loan. If you want this loan to be approved there are certain conditions that need to be followed. Those conditions range from the nature of your business, to the purpose of the business loan, the guarantee fee, the maturity period and your business size.

If you are serious about getting your business loan with the help of the SBA, it is better that you gather the most amount of information that you can, to guarantee you meet all the requirements for the said business loan. Consulting with your bank can also be a good idea.

You know you will need a lender for this endeavor and you will need to inform him/them of all your companies activities, profits and losses. It can happen that the lender approves your loan right away. In the case the lender refuses your application, than you can ask him to provide you with an SBA application form. That form should be completely filled and forwarded to the SBA. The process of getting a business loan through the SBA is not has difficult as it seems, all you have to do is follow all the steps the entities give you. For your convenience, here follows a small list of documents that are required when requesting a business loan:

-Profit and loss statement and Balance sheet for the past 3 years.

-Income tax returns for the past 3 years.

-Filled loan application form. (This form must be completely filled)

-Cash flow projections for one year.

-History of business and how a statement on how an SBA approved loan would help the business.

-Clear personal credit history.

- Personal financial statement.

-Cover letter and resume of the participating owners.

-Certificate of doing business.

-Business lease papers.

Do not forget to put all your efforts in getting your business loan. Your determination will be as important in getting your business loan as the viability of your business itself.

Author: Robert Cash
Article Source: EzineArticles.com
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In most cases, lenders would prefer to offer a small business a secured line of credit in which collateral is put up for guarantee. However, if you do not want to put personal assets, then applying for unsecured business line of credit should be considered as the best option. However, it can be quite challenging for a small business to get unsecured business lines. Here are a few tips to improve your chances for when you apply for one.

First step would be to have your business properly filed. It would be beneficial to have your business listed as a corporation or as an LLC. Filing a business alias doesn’t really help you at all because your business is still tied to your personal assets.

If you are just starting your business then you should allow time for your business to build a decent business credit score and history. Most lenders would require at least two years of operations. However, you need to make sure you keep on top of your credit and try not to have anything unfavorable on there.

Next you want to sign up with one of the reputable credit agencies to keep track of your credit transactions and keep tabs on your business credit score report. If you plan to apply for loans for a lot of money, another thing to look into is Paydex registration for your business. The system keeps score on the promptness of your company’s payments. In order to increase your chances of getting unsecured business line of credit, your company will need to get as close to the 100 score as possible.

And while you are still building up your business credit score, ensure a proper physical address for your company and get services such as a separate phone line, fax number, and internet connection. Remember to sign up for these services under your corporation name. This will start establishing your business credibility when you build up a payment history with them.

When it’s time for you to approach lenders and start applying for loans, have documentation on the purpose of the loan and the amount of unsecured line of credit you wish to ask. Include references from banks and vendors in order to show your businesses integrity on your application. Never forget to your company’s financial statements in order to assure lenders your business is stable enough to obtain loans.

Lastly, keep in mind that unsecured lines of credit carry higher interest rates as wells as stringent payment terms. Before closing the loan agreement, decide first if your company will be able to meet these terms all the way. Never let your business enter into an agreement it cannot keep. This would put your business into further trouble.

With these tips in mind, you can increase your chances of getting unsecured line credit for your small business without having to risk your personal property.

Author: John Purfield
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“Money begets money,” is the practical example that fits most excellent especially in the business context. Many entrepreneurs with their existing business want to expand their business, buy more inventories, or to pay off wages. New business owners want to purchase lands, business equipments and hire employees. All these activities require capital. Business loans are one of the best options to raise funds for such purposes. If you invest money, you will get in return.

People in the present context are taking business as a profession. Business is one of the best ways to earn money. The only thing that require is a good business strategy, planning and capital. Out of these requirements, capital is one of the best factors. Without capital you cannot run any business. Say thanks to business loans that can help you in raising funds for your business. Lenders in the financial market are liberally offering business loans to the present entrepreneurs or the new business entrepreneurs.

If you are willing to start a business or expand an existing business, you can obtain business loans. Such loans are available in two different forms. If you can put security against the loan amount, you can look for secured business loans [http://www.ask4loan.co.uk/car-loan-dream-articles.htm]. Such loans allow you to borrow more capital for a longer time period. The only disadvantage associated with such loans is the risk of repossession. Such problems arise in case of defaults in the repayment. But, if you manage the loans in a proper way, you can avoid such problems.

On the other hand, unsecured business loans require no collateral against the loan amount. Though it is a short term loan where you can obtain small amount of loan as compared to secured loans but, there is no property risk and the loan processing is also fast.

Put your effort in the right direction with business loans and run your business successfully.

Author: John Carry
Article Source: EzineArticles.com
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Many business owner and other professionals in the commercial mortgage industry are surprised to learn that the SBA does allow refinances through the 7a program and their rate does not have to float.

In terms of what situations qualify for the refinance, it boils down to taking borrowers out of a difficult situation. For example, if the borrower is in a hard money loan they’ll qualify. Or a borrower facing a ballooning or having a rate at or 2% of market will fit as well. The general rule of thumb is that if the borrower saves 20%on their monthly payment by the refinance, they qualify, but still have to meet the rest of the underwriting guidelines. Which, because the SBA guarantees 75% of the loan for the lender, the underwriting rules are reduced relative to other commercial mortgages.

One of the biggest benefits of refinancing through the 7a is that you can go up to 90% loan to value – 90%… Most of the industry is currently at 70-75% on general purpose/ 60% on special purpose and in a declining property value environment, where many deals are getting canceled due to lower than expected value, this is a huge benefit.

Another major benefit is that there are a handful of SBA lenders that will go down to mid 500 credit score and a few that will go to 500, assuming that the rest of the borrowers situation is ok.

The floating rate and guarantee fee have historically been the biggest negative of the program. The rate that most borrowers see is PRIME + 1-2.75% and floats, adjusting once per quarter. The guarantee fee is 2.75% of the guaranteed portion of the loan (75% of the actually loan balance), which is received at close, taken out of the proceeds.

HOWEVER, it pays not to assume that all SBA 7a loan programs/lenders are the same. We represent 2 banks that are currently offering 5 year fixed 7a loans AND they absorb the guarantee fee themselves. So the borrower gets the benefit of the 90% financing and “loosened” underwriting guidelines plus has a 5 year fixed rate mortgage, at prime plus 1-2%. Again, fixed for 5 years, and amortized over 25 years.

Cash out refinances are doable under the 7a program but come with more loan scrutiny. The most important concept here for the borrower to understand is that all cash out proceeds must go towards business expenses. No personal debt consolidation allowed, for example. Further all cash out proceeds will be controlled by the bank and they will directly pay off any debt that is being rolled into the loan.

Despite all the issues currently going on in the capital markets, the SBA 7a program is still viable and offers business owners a solid option to refinance their current debt into lower rates and thus lower monthly payments.

Author: Jeff S Rauth
Article Source: EzineArticles.com
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The word is out that the new stimulus bill (American Recovery and Reinvestment Act of 2009) has a special provision creating a Federal government secondary market for SBA guaranteed loans. If you are a small business owner, will this loosen up my lender purse strings and allow some money to trickle down from the big cats on Wall Street and into your pockets? Yes, it is a good start, but hold your contagion because it is not as wildly exciting as you might think. In fact, some have openly criticized the new bill. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?

Let us first begin by looking at a program that is already in existence and is being sold on the secondary market. There is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans. Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.

Some undiscerning headlines claim $3 billion in the stimulus bill is being pumped into the secondary market and viola, the banks will be making more loans. Not so fast. As this article explains, that money is being pumped into an elite SBA program that will not affect the average small business owner.

Before I give a clear answer, let’s define what we’re talking about. Most of us have heard about SBA loans. With the exception of disaster loans and the Microloan Program (for underserved communities), the Federal government through the U.S. Small Business Administration (SBA) does not actually loan the money. Instead, it licenses private lenders, like the community bank on your block, to make loans and if there is a default, Federal government guarantees come to the rescue and reimburse for a certain percentage. So, if you got a $100,000 loan (in this economy? OK, hypothetically) that has a 75% guarantee and there is a default, after going through certain steps, the lender could receive reimbursement for up to $75,000. And remember there are literally thousands of lenders out there that do SBA loans for the simple reason they feel warm and fuzzy with the guarantee.

Now here is how the secondary market works. In the good old days absent toxic reverse mortgages, banks held onto their loans and simply kept the in-house interest. But those days are long gone and banks now pool their loans and sell to investors on the secondary market which pays them a premium because of the expected enjoyment of future loan interest. They were packaged almost like mutual funds. Unfortunately, the secondary market is now a dry creek bed. I’m not handing out excuses for our banks, but this is one of the reasons they are not loaning.

But ask the average person on the street and a grimace creeps upon their face when they hear the name SBA loan: “Yeah, in whose lifetime? I would much prefer getting a loan while I’m still young.” Visions pop into their heads of pounds of paperwork, endless regulations, untold delays, and layers of government red tape. But not so fast. The SBA also has excellent smaller loans which are truly “lean and mean”.

So what does the new stimulus bill do? It got on an “A” for the idea but hardly passing with the follow through-it did not go nearly far enough. Under Section 503 of the new bill it has set up a secondary market for 504 loans only (to eliminate any confusion, the term “504″ refers to a section under the old Small Business Investment Act, and not the current stimulus bill) which applies primarily to larger ventures seeking commercial loans for buying land and buildings. A private lender works in conjunction with a government Certified Development Company. Typically, the private lender makes a loan for 50% of the cost under a first mortgage (not guaranteed by the SBA) with 40% loaned by the CDC in a second position (100% SBA guarantee). The other 10% would be cash by the borrower.

So, if you are a trucking company that has worked hard and increased your number of trucks from 5, to 10, to 15, and years later to 100, you need to buy a new yard and warehouse (for less than truckload jobs). Cost–$4 million. You get a bank to loan under the 504 Program as a first position commercial mortgage. The SBA now has the authority to set up a SBA Secondary Market Guarantee Authority and give guarantees for pools of 504 loans to be sold to third party investors on the secondary market. The lender has to retain at least a 5% interest at risk. The SBA loan guarantees not more than $3 billion of such pooled mortgages.

If you like to read fine print, here is the exact wording:

SEC. 503. ESTABLISHMENT OF SBA SECONDARY MARKET GUARANTEE AUTHORITY. (a) PURPOSE- The purpose of this section is to provide the Administrator with the authority to establish the SBA Secondary Market Guarantee Authority within the SBA to provide a Federal guarantee for pools of first lien 504 loans that are to be sold to third-party investors.
(b) DEFINITIONS- For purposes of this section:
(1) The term `Administrator’ means the Administrator of the Small Business Administration.
(2) The term `first lien position 504 loan’ means the first mortgage position, non-federally guaranteed loans made by private sector lenders made under title V of the Small Business Investment Act.

And further:

(2) GUARANTEE PROCESS-
(A) The Administrator shall establish, by rule, a process in which private sector entities may apply to the Administration for a Federal guarantee on pools of first lien position 504 loans that are to be sold to third-party investors.

But there is a catch. In another article I stated the SBA is doing away with the borrower paying a loan guarantee fee, which can be thousands of dollars for larger loans. Unfortunately, for the secondary market on 504 loans, the SBA will charge a fee. Currently, these loans did not have an SBA guarantee:

(3) RESPONSIBILITIES-
(A) The Administrator shall establish, by rule, a process in which private sector entities may apply to the SBA for a Federal guarantee on pools of first lien position 504 loans that are to be sold to third-party investors.
(B) The rule under this section shall provide for a process for the Administrator to consider and make decisions regarding whether to extend a Federal guarantee referred to in clause (i). Such rule shall also provide that:
(ii) The Administrator shall charge fees, upfront or annual, at a specified percentage of the loan amount that is at such a rate that the cost of the program under the Federal Credit Reform Act of 1990 (title V of the Congressional Budget and Impoundment Control Act of 1974; 2 U.S.C. 661) shall be equal to zero.

This secondary market program set up by the SBA will only last for two years under section 503 (f). Because this is emergency legislation, the SBA is to issue regulations within 15 days of the signing of the bill (503 (i)); amazingly quick for government purposes.

What about the secondary market on other loans? The typical everyday medium to large SBA loan is under the workhorse 7(a) program. For example, using the same trucking company, if they needed money to purchase more trucks, hire employees, or for general cash flow, they would seek a 7 (a) loan. The stimulus bill does not set up a new secondary market for 7(a) loans. But it does allow direct government loans (not made by private banks) to broker-dealers in the secondary market purchasing 7(a) loans. So if you are in the business of buying pooled 7 (a) loans and need a loan to do so, taxpayers monies will be used for this purpose. The idea is to stimulate this secondary market again so banks will make further loans.

But what about the small guy? here the news is very disappointing. Studies show the average small businesses loan is $10,000. None of the stimulus programs helps the secondary market on the smaller loans and so few lenders are loaning.

But do not give up hope. There are still lenders out there, including those lending their own money, that are still making loans in the range of $5,000 to $50,000 unsecured at good rates, in the neighborhood of 7.75%. You just have to know where to look.

Author: Sue B. Malone
Article Source: EzineArticles.com
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Lack of fund in business is simply not affordable. Your business can result in a black out without insufficient fund. To avoid this situation, you must avail a secured business loan which will not only give your business a financial back up but also help it cope up with uncertain financial crisis.

In order to avail a secured business loan, you should first of all determine the purpose of the loan, and the amount that you need. Prepare a detailed plan for spending the loan. This plan is very important because it will decide your loan amount, rate of interest, repayments etc. In this plan you also need to include your profit and loss account. Once you are over with these preparations then apply for the required amount to lender.

The most convenient and easy method to apply for secured business loan is to apply online. Internet provides a lot of details about various kinds of lenders available in the market. These online lenders usually have loan rates with a little difference from one another. This is the result is tough competition among different online lenders. So, you get a chance to benefit from these lenders by comparing different loan rates and the select the best among them suitable to you.

Secured business loans are available to two types of borrowers. The first is those who are already in a process of running a business and are making profit from it. The second category is for those who are planning to start an enterprise of their own and need fund to execute their plan. In both the cases you need to put a security in order to avail the loan. The security can be anything from your house, car, jewelry to any valuable document. While putting the collateral, you should keep in mind that the greater will be the value of your property, the greater will be the chances of getting a higher amount of loan.

You can get a secured business loan with an amount ranging from 5000 to 75,000 or even more. The interest rate will depend upon the amount of loan you borrow. You will an easy and flexible repayment of 3-25 years with a low monthly installment.

A secured business loan will fulfill all your needs that you require for your business. If you succeed in finding the right loan program, you will easily get a chance to youre your business reach heights.

Author: Michael Brian
Article Source: EzineArticles.com
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Cultural attitudes towards colors, numbers, shapes, sizes and symbols vary greatly from country to country. In designing your packaging, be sure to take into account these Do’s and Dont’s for the national markets you target.

CZECH and SLOVAK REPUBLICS

• DO use the number 7, which has positive connotations.
• DON’T dress your products in black; but red, white, and blue are looked on favorably.

DENMARK

• DO use red, white and blue for packaging. Hearts are a good motif, particularly at Christmas.
• DON’T use the unlucky number 13.

GERMANY

• DON’T use red or combinations of red, black and white, or brown. Number 13 is also considered unlucky here.

GREECE

• DO use bright yellows and greens or blue and white, avoiding black.
• DON’T use unlucky 13; but 3 and 6 are considered positive.

ITALY

• DO use bold colors for foods and toys, soft tones for cosmetics, clothing and “upscale” items.
• DON’T use purple or the number 13. read more »

In order to give a boost to the spirit of entrepreneurship of its citizens, the federal government provides business loans to individuals to help them start a small business. The governments Small Business Administration (SBA) handles these loans usually by acting as a guarantor for loans provided by other institutions. In rare cases, the loan is provided directly by the SBA.

Besides the SBA, there are other government agencies that have programs of their own that provide loans and grants to small businesses. In order to get these loans, a small business owner or entrepreneur has to submit a proposal showcasing the blueprint of the business plan and the specific capabilities that he or she possesses to run the business effectively.

The small business owner applying for the loan needs a positive credit score in order for the loan to be approved. These credit factors are reviewed and analyzed by the authorities before a decision is made to extend the loan.

There are several categories of loans programs provided by the SBA. One of these is the Basic Loan Guaranty program, which aims to help small businesses who may not be normally eligible to receive loans from lending institutions. These loans are provided by commercial lending institutions with the SBA acting as guarantor.

The Certified Development Company (CDC) Loan Program aims to assist those seeking to own real estate or machinery for expansion or modernization. This program provides a long term loan at a fixed-rate of interest. Usually, ten percent of the loan amount needs to be contributed by the small business owner in the form of equity.

The micro loan program aims to provide short-term loans with a maximum limit of $35,000 primarily for working capital and inventory requirements. These funds cannot be used to pay off existing debt. This loan is also available for non-profit childcare centers. The loan prequalification program permits those seeking loans of amounts less than $250,000 to have their application analyzed and potentially sanctioned by the SBA before lenders are approached for consideration.

Government small business loans play a vital role in fostering the spirit of entrepreneurship and should be looked on as an important means of funding for those looking to start their own business.

Author: Peter Emerson
Article Source: EzineArticles.com
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SBA 7a loans have been all over the TV, papers and internet lately.Though this is the most popular program for the SBA it general resides under the radar and very few people know what it really is and what the real benefits of the program are.The current hype is largely due to the Stimulus Package, but what is the program really all about?

The primary benefits of the program include high levels of leverage, ability to roll working capital, and equipment costs into the loan.In addition, underwriting standards are more flexible than typical commercial bank loans.For example, the SBA allows for the use of business income projections and lower debt coverage ratios.

Most people assume that projections are only used on start up businesses.That is not the case; you can use them for example on turnaround situations or on expansion projects. Say you needed to add an additional 30,000 sf of space onto your existing building to accommodate a new machine/type of production.

However your current level of net income does not meet the standards of your bank.They are only considering your current net income (historical) not what it will be based on the expansion.The SBA 7a loan can allow for this and accommodate your expansion.

Lower debt coverage ratio are very important especially now, as the economy continues to sputter.The typical bank now wants a 1.3 ratio, while the SBA 7a loan can go down to a 1.1 or even lower.There are a few banks that will go to a .8, which means you are losing money every month (However you do have to have other compensating factors, like a relative high level cash, equity or a solid turnaround plan).

But what the ratio really reflects is your real cash flow.For example, for every $1 of annual mortgage payments, your business needs to nets $1.20 of net income to hit a 1.2 debt cover ratio.So after you pay the proposed loan you would still have $.20 left over.By bringing the ratio down to a 1.1 you don’t have to prove as much net income ($1.10 in this example) as you do on typical commercial bank deal.

For these reasons and others, the SBA 7a loan remains a solid loan program for America’s small business.

Author: Jeff Rauth
Article Source: EzineArticles.com
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Business loans can be availed by aspiring entrepreneurs for starting a new business or by existing businesses for various purposes. The biggest problem faced by aspiring businesspersons is that of investment. A business start up loan however can provide them with the necessary investment required. For existing businesses, lenders in UK have both secured and unsecured business loans to offer.

Business Loan borrowed by would-be entrepreneurs are usually secured against collateral. It would be a huge risk to the lenders if business-start-up loans were sanctioned without collateral. Any security offered in the form of property allows the lenders to sanction the loan on easy terms and conditions. The interest rates of such business loans are low and the repayment term is long thereby reducing the monthly instalments substantially. The disbursement of such loans however is not fast due to the evaluation of the collateral involved and the consequent paper work. There is also a risk factor for the borrower to consider. If he fails to pay back the loan, the property offered as collateral would be sold off and the loan amount would be recovered by the lender.

Business Loans borrowed by existing business can be secured or unsecured. Secured business loan can be borrowed by offering some of the company assets as collateral. This makes the lenders job easy and he sanctions the loan on easy terms and conditions. However, the terms and conditions of the unsecured loans are strict. Though they reach the consumer very fast, they pose greater risk to the borrower than the secured business loan. Secured or unsecured business loan for existing businesses may be used for

Buying new machinery, equipments, and raw materials that the company may require

Spreading the business

Paying off the old debts of the business

Delivering the business from current financial problems

Before applying for a business loan, an aspiring entrepreneur should jot down on paper his future plans for the business he intends to start. For existing businesses, it would be better to indicate what turn the business would take in the immediate future. All this will make the lenders job a lot easier. Also, compare the rates of different lenders before filing the application.

Author: John Carry
Article Source: EzineArticles.com
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