Business can benefit from SBA loans - bizjournals:

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Startup ventures and existing companies in need of capitall are looking atevery option, including bank loans that carry a federal guarantee from the . “They need said Donna Ettenson, vice president of operations forthe . “Creditf right now is very, very tight. We are seeing concernn across the country. People are holding their breath and waiting to see wherde theshoe drops.” The good news: Businessesx that don’t qualify for conventional bank financing are continuing to benefif from the SBA’s 7(a) Loan Guaranty Program. Just look at the For the fiscal yearendedx Sept.
30, the federa l agency approved 78,000 loans and a tota of $18 billion in federapl guaranteesthrough 7(a) – the primary loan program as well as its 504 loans. “Thw SBA is here. We are open for business,” says Eric associate administrator at the Office of Capitalo Accessin Washington, D.C. “We are here to support America’s smal l businesses in their different needs and to help make sure they have accessto capital. The team here at SBA is committesd tothat mission.” The federal agency doesn’ t actually make the loan. Rather, companies approach lenders and work directluywith them.
If the bank deems a businesws loantoo risky, it may suggest that the applicant considet applying under the Loan Guaranty The SBA will back up to 85 percentt of loans up to “The fundamental of it is if (lenders) can do the loan conventionallyg – if it meets their conventional standardxs – they don’t need an SBA guarantee,” Zarniko said. “But if the business, for whatever requires things that are outsider of their normal credit then that’s where the SBA comes in. It might be a longer repayment period; it might be that they don’t have as much it might be a different interest rate or a differenf structure ofthe loan.
” He said there’s a long list of lenderxs nationwide that actively participate in SBA The loans they make are used for everything from equipment purchase and working capital to expansioh of existing facilities. “It’s not the decisionm of the small-business owner,” Ettenso noted. “It’s really the decision of the bankers whether they want to enteer into that relationship with SBA and get that loan The Association of Small Business DevelopmenyCenters (asbdc-us.org) represents a network of nearly 1,00p centers nationwide that offer free consultingg and low-cost training.
The according to the Web site, is helpingv entrepreneurs realize their dream of business ownership and boosting the competitiveness ofexistingg companies. The association, fundef in part through a partnershilp withthe SBA, offersd a direct link to the federapl agency and other resources on its Web “It’s a huge infrastructure,” said Ettenson, who in the past has worke one-on-one with entrepreneurs in several states. “About 60 percent of our clientsd are people who are already in business and 40 percentt are in thestartup mode.” For new and existinfg companies looking to participate in the 7(a) program, a good businesd plan is a must.
Take the time to effectivelty craft the plan before you approach a lender aboutf financingyour dream, business advisers say. All capita sources will want to see your plan for the startup and growtuh ofyour business. “We actually don’t do direct Zarnikow said. “We provide a partial government guarantew of a loan that is made by a credit union, small-business lending corporation or certified development company.
“So basically the lenders need to represenyt to us that they would not have made the loan of the same terms without the partial government It means that the borrower is basically gettin g a loan thatthey wouldn’ otherwise qualify for in the conventionaol market,” he said. That’s good news for the small-business “Small businesses are mainstream America,” Ettenson said. “Wd are 98 percent of the employers in this If you look at large they areshedding jobs. This economy will only grow througnh the growth ofsmall business.” Her advice?
Don’ t get discouraged and give up on that loan you want and “What’s interesting is I think a lot of smalo businesses come to (the SBDCs) thinking: ‘Here is my business Here are my financials. Here’s my cash flow. If I go to Bank X and they turnme I’m done.’ The answer is that’s not because everybody’s lending portfolio is different. You have to shop that businesssplan around,” Ettenson said.