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Financing Your Small Business

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Free Credit Reports. One free report per year from each of the three ... Mail: Annual Credit Report Request Service. P.O. Box 105281. Atlanta, GA 30348-5281 ... – PowerPoint PPT presentation

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Title: Financing Your Small Business


1
Financing Your Small Business
2
Financing Alternatives
  • Personal savings
  • Credit Cards
  • Family and friends
  • Local revolving loan funds
  • Suppliers
  • Leasing
  • Strategic partnerships
  • Banks, credit unions, and other lenders
  • Guaranteed loans (SBA Community Express)

November 15, 2009
2
3
SBA Community Express Loan
  • Loans to be used only for business-related
    purposes(however, cannot be used to purchase a
    business)
  • 10-year loans no collateral required no
    prepayment penalties
  • Minimal paperwork and fast decisions
  • Electronic funding directly into business
    checking
  • Affordable monthly payments automatically debited
  • Based in large part on personal credit history
  • Financial, technical, and management assistance
    BEFORE and AFTER the loan (TAP Report)
  • SBA guarantees 85 of the loan

4
Free Credit Reports
  • One free report per year from each of the three
    reporting agencies Equifax, Experion, and Trans
    Union.
  • Toll free 1-877-322-8228Online www.annualcredi
    treport.com
  • Mail Annual Credit Report Request
    Service P.O. Box 105281 Atlanta, GA
    30348-5281
  • Identity theft is REAL --- Get your 3 FREE
    reports throughout the year (January, May,
    September)

5
FICO SCORES
  • Fair Isaac Corporation (FICO) scores are your
    credit rating used by most banks
  • They range from 300-850, higher is better
  • Most lenders base approval on them
  • Higher scores mean lower interest rates
  • The median FICO score in the U.S. is 723
  • More info at www.myfico.com

6
Whats in your FICO Score?
7
SBA Community Express Lenders in Alabama
  • Redstone Federal Credit Union (RFCU)
  • Innovative Bank (SOHO)
  • Superior Financial Group (SFG)
  • Borrego Springs Bank (BSB)

8
Redstone Federal Credit Union (RFCU)
  • 5,000 to 50,000 in 1000 increments
  • Interest rates of Prime 4.00 for loans 5,000
    - 25,000
  • Interest rates of Prime 3.25 for loans 26,000
    - 50,000
  • 325 processing fee and SBA guaranty fee of 2
  • Fees deducted from the loan proceeds (discounted
    loan)
  • Can be established as a Line of Credit.
  • If the loan is paid on time for 6 months, the
    borrower can apply for additional funds

9
Innovative Bank (SOHO)
  • 5,000 to 50,000 in 5,000 increments
  • Can be approved for a lesser amount
  • Interest rate is Prime 4.75for loans 5,000 -
    25,000
  • Interest rate is Prime 3.25for loans 35,000
    and 50,000
  • Packaging fee of 475 and SBA loan guarantee fee
    of 2
  • Fees deducted from loan proceeds
  • Fees not charged on 5,000 loan
  • If the loan is paid on time for 12 months, the
    borrower can apply for additional funds
  • Military/Veterans qualify for 90-day deferment of
    1st payment

10
Superior Financial Group (SFG)
  • 5,000 to 12,500 in 2,500 increments
  • 15,000 to 25,000 in 5,000 increments with
    stricter credit requirements
  • Interest rate is Prime 4.5
  • Packaging fee of 450 for loans up to 12,500
  • Packaging fee of 550 for 15,000- 25,000 loans
  • Fees deducted from loan proceeds
  • Fees not charged on 5,000 loans

11
Borrego Springs Bank(BSB)
  • 5,000 to 50,000 in 1,000 increments
  • Interest rate of Prime 4.75 for loans 5,000
    to 25,000
  • Interest rate of Prime 3.75 for loans 26,000
    to 50,000
  • Fees deducted from the loan proceeds

November 15, 2009
11
12
Eligibility
  • Borrowers must be of good character - cannot
    be a convicted felon - has not defaulted on
    government-backed student loans- has not
    defaulted on child support payments- has no IRS
    judgments or tax liens
  • Liquid assets cannot exceed 100,000 (does not
    include 401k or IRA accounts)
  • Franchises must be on the SBA-approved Franchise
    Registry (www.franchiseregistry.com/registry).

13
Ineligible Businesses
  • Non-profit businesses
  • Investment real estate
  • Agricultural and farm businesses
  • Fishing and shore operations, and mines
  • Medical facilities such as nursing homes
  • Applicants doing business in a foreign country
  • Businesses of a religious nature
  • Businesses with products or services of a sexual
    nature

November 15, 2009
13
14
Estimated Monthly Payments (10-Year Loans)
Based on Prime _at_ 6.00 4.5 (avg) Based on
Prime _at_ 6.00 3.7 (avg)
15
Summary
16
Lender Contact Info
  • RFCU www.redfcu.org or call 256-722-3636
  • SOHO www.innovativebank.com or call
    888-960-0700
  • SFC www.superiorfg.com or call 877-675-0500
  • BSB - www.borregospringsbank.com or call
    866-644-0042

17
Other SBA Loan Programs
  • 7(a) Loan Guaranty - Most used SBA type of
    loan- Up to 2 million for working capital,
    fixed assets, repayment of existing debt, buy
    a business, etc.
  • SBA Express- Up to 350,000 for working
    capital, fixed assets, repayment of existing
    debt, buy a business, etc.
  • Patriot Express- For Veterans and active
    military personnel- Up to 500,000 for working
    capital, fixed assets, repayment of existing
    debt, buy a business, etc.

18
Other SBA Loan Programs
  • For more information,
  • visit the SBA website at www.sba.gov
  • and click on Financial Assistance
  • under Services

November 15, 2009
18
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