Small Business Loans From A Preferred SBA Lender
Ivanhoe Capital Is On A Mission To Transform The Negative Perception Of The SBA
We probably have heard more negative comments and apprehension about the Small Business Administration (SBA) in the last 20+ years than anyone on the planet considering we have been in the SBA loan business for all those years. Where do these negative perceptions evolve from?
Well, I can tell you from experience that almost everyone’s pessimism and apprehension come from a bad experience with either a lender, bank, or broker. That institution simply didn’t know what they were doing and really shouldn’t have been doing small business loans to begin with.
THIS IS WHY WE ARE ON A MISSION – TO DEBUNK SOME OF THESE NEGATIVE STEREOTYPES…BECAUSE WE KNOW WHAT WE ARE DOING!
When it comes to small business loans you really have to seek out a professional who knows the ins and outs of the SBA and their everchanging Standard Operating Procedures (SOP) so you don’t waste your time. Then, also have a team that can package, underwrite, and close a loan efficiently and with a sense of urgency.
We have a team of highly skilled individuals who have a proven system to take you from Contingent Commitment to approval, and then to close quickly. SBA loans can be complex, but when you have the experience and processes in place it becomes routine, like brushing your teeth….It’s second nature to us now!
We work with you every step of the way to ensure the process is as smooth as humanly possible. We can even anticipate any issues that might arise and mitigate them before they become problems because of our vast experience and knowledge.
Check out our Success Stories to see just a few of the Small Business Administration loans we have structured and closed. Some of which needed some tender loving care to finally get to the finish line.
5 Reasons Why Small Business Loans May Be Your Best Friend
01.
Up to 90% Financing
Try getting anywhere near that percentage in a conventional commercial loan? You won’t get close! The reason Small Business Administration lenders can offer this is that the loans are backed by a guarantee from the United States government that states upon default the government will reimburse the bank right now up to 90% of the loan amount. That is why SBA lenders are able to offer much higher loan-to-value (LTV) than you will ever get with conventional loans.
02.
No Loan Covenants / Fine Print
This is the part that a lot of small business owners overlook and could be the kiss of death for them. All conventional commercial loans have covenants. If you break a loan covenant it can put you in hot water with the bank and you may end up in default and eventually into special assets even if you have made all your payments on time every month.
Here are four examples of loan covenants in the conventional commercial marketplace that do not exist in the SBA world:
- Minimum Net Worth requirement equal to the loan amount
- Fixed Charge Coverage Ratio where you must adhere to a minimum cash-flow standard set by the lender that you will have to prove every quarter
- Minimum Liquidity Requirements where you must have a certain amount of
- Minimum Debt-to-Equity Ratio means you must adhere to a certain percentage set by the bank of what they see as an acceptable amount of what the company owes as opposed to what it owns
03.
No Balloon Loans
SBA loans are fully amortized over a 10 or 25-year loan schedule. Most conventional loan programs for small businesses balloon after 3-5 years and then you either have to renew the loan and go through the underwriting process again, move the loan somewhere else, or pay it off.
04.
No Prepayment Penalty or Very Minimal
Most 10-year Small Business Administration loans do not have any pre-pay provisions at all. Most 25-year SBA loans have only a 3-year pre-payment period.
05.
Roll Closing Costs Into the Loan
You can roll all your closing costs into the loan itself. Example: appraisal fee, environmental fees, attorney fees, title fees, and any other miscellaneous fees. Also, any fees you pay count toward your equity infusion in the small business loan which does not happen in conventional financing.
Find Out About Our Pari-Passu Loan Structure
We can go up to $10 Million with a pari passu loan structure. Maxing out your SBA 7a exposure and then adding a conventional note on equal footing.
Warning: Do Not Apply for an SBA Loan Before Reading This
Expanding a small business or acquiring a company can feel like an overwhelming endeavor, but with the help of an SBA loan, your chances of securing the funds can greatly increase. Before you apply, it’s important to understand the process and specifics of small business loans and what to expect.
Step 1 - Get Your Documents in Order
Collect all pertinent documents you will need for the initial underwriting of the loan. These would include business and personal tax returns for the last three years, current year Profit & Loss, Balance Sheets, and Current Debt Schedule for your business, a Personal Financial Statement, and your resume on experience if this is an acquisition or start-up business.
Also, a copy of your credit report would be helpful in order to do a global debt analysis of yourself. There will be more, but this short list is a good start for us to see if we can issue a contingent commitment letter to finance.
We have a 95% closing ratio once we have issued a Contingent Commitment Letter to a borrower.
Step 2 - Know the Rates
Most Small Business Administration loans are going to be a variable term and will be based on the prime rate plus a spread of usually between 2.00 – 2.75. This means that if the prime rate that the Federal Reserve controls goes up, the interest you pay will go up. When the Fed cuts rates, the interest you pay will also go down.
In certain instances, we can even fix rates for the life of the loan or a certain time. Just know that if rates do go down in the future your loan will remain at the level it is fixed at.
Step 3 - Know the Fees
Usually, there is an SBA Fee of roughly 3% of the guaranteed portion of the loan amount, which will be rolled up into the small business loan itself. This fee’s purpose is to act as a fund to cover the cost when a loan does go bad and must be charged off by the SBA. At times the SBA cuts these fees for certain transactions or discounts it.
There are also other closing costs, such as title fees, attorney fees, appraisal fees, and business valuation fees. These fees will be specific to your loan and the purpose of your loan. Some of them may or may not apply to your scenario.
Step 4 - Know the Terms
SBA loans have two different terms. When there is commercial real estate, the loan will be amortized over 25 years. When the loan does not have a real estate component, then it will be amortized over 10 years.
Sometimes, when you are financing real estate and other items together, the rate can be blended.
Also, as a general rule of thumb, when you are acquiring a small business and the real estate is more than 50% of the total project cost, then the whole loan can be amortized over 25 years.
Step 5 - Work with a PLP Lender, One That Knows What They Are Doing
Too many times, borrowers go to the bank they currently do business with for a loan, and that usually is the wrong move. The reason is that there are not too many banks or institutions that really know SBA lending and are efficient at it.
At Ivanhoe Capital, we pride ourselves on the system that we have in place whch keeps the loan process flowing very rapidly. Your loan will not be caught up in levels at our bank that prolong the timeline to close.
We are on top of all the processes that go along the way and don’t allow small business loans to get stuck.
Also, you will want to work with a Preferred Lender Program (PLP) which can approve a loan without having to get permission from the SBA prior. This will save two to three weeks in the process on average. We are definitely a PLP lender who is ready to get you Approved and Closed quickly!
Small Business Loans Are Very Popular With:
Manufacturing
Retail
IT
E-Commerce
Electrical Contractors
Plumbing Contractors
HVAC Contractors
Health Care
Homecare
Medical Practices
Property Management
Truck Routes
Hotels & Motels
Auto Repair
Childcare
Agriculture
Gas Stations
Pool Services
Landscaping
Restaurants
Distribution
Self-Storage
Body Shops
Parking Lots
Education
Tree Services
Entertainment
Construction
Transportation
RV Parks
Dealerships
Franchises
Car Washes
Small Business Loan Success Stories
Pool Construction Company Acquisition in Florida Closed at $1.6M
$2M Staffing Company Closed SBA Loan in 42 Days
$2.45M Loan for Acquisition of Specialized Door & Storefront Company
Tell Us About Your Business, Merger, or Acquisition
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