Small Business Administration Loan (SBA)

ICA Is On A Mission To Transform The Negative Perception Of The SBA

We probably have heard more negative comments and apprehension about the SBA in the last 15 years than anyone on the planet considering we have been in the SBA business for all those years. Where do these negative perceptions evolve from?

Well, I can tell you from experience that most everyone who is pessimistic when it comes to the SBA stems from a bad experience with either a lender, institution, or broker who simply didn’t know what they were doing and really shouldn’t have been in the SBA business to begin with.

THIS IS WHY WE ARE ON A MISSION – TO DEBUNK SOME OF THESE NEGATIVE STEREOTYPES…BECAUSE WE DO KNOW WHAT WE ARE DOING!

The fact is we are experts in the SBA world. When it comes to SBA loans you really have to seek out a professional who knows the ins and outs of the SBA so you don’t waste your time.

We have a team of highly skilled individuals that take you from term sheet to close quickly. SBA loans can be complex, but not to someone who does them every day for the last 15 years. It’s just routine, like eating breakfast or brushing your teeth….It’s second nature to us now!

To start the SBA loan process, there is normally a standard list of documents that need to be collected just like any other loan. Then there is some underwriting that needs to be done – maybe some stories that need to be listened to or some schedules that need to be reconciled, but again and to reiterate nothing different than a conventional loan.

We work with you every step of the way to ensure the process is as smooth as humanly possible.

Now what I am about to tell you can possibly transform your small business in 2021!

5 Reasons Why SBA Loans In 2021 May Be Your Best Friend

1. Up To 90% Financing

Try getting anywhere near that percentage in a conventional commercial loan? You won’t get close! The reason SBA 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 LTVs than you will ever get with conventional loans.

2. No Loan Covenants (The Fine Print)

This is the part that a lot of 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
cash-on-hand in the bank at all times
Minimum Debt to Equity Ratio meaning 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

3. No Balloon Loans

SBA loans are fully amortized over a 10 or 25-year loan schedule. Most conventional commercial loan programs 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.

4. No Prepayment Penalty or Very Minimal

Most 10-year SBA loans do not have any pre-pay provisions at all. Most 25-year loans have only a 3-year pre-payment period.

5. Roll Closing Costs into the Loan

You can roll in 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 loan which does not happen in conventional financing.

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Ivanhoe Capital Advisors is a Preferred Financial Service Company by Approved SBA Lenders

ICA’s strength is in our ability to review and process the initial package proficiently that is presented to our SBA loan participants. In the SBA world, there are no second first impressions. With our 30 plus years of SBA experience, we can assure you that your business will be represented in a way to maximize your chances of successfully being approved.

What Are The 6 Types Of SBA Loans?

SBA 7(a) Loan: working capital up to $5 million (most popular)

SBA Microloan: working capital up to $50,000

SBA CDC/504 Loan: purchasing commercial real estate that is owner-occupied

SBA CAPLine: small businesses that need a line of credit that can be used repeatedly

SBA Export Loan: exporters that need to finance their exports

SBA Disaster Loan: small businesses that have been affected by a natural disaster

SBA 7a Loan Program (Since 1953)

Almost any for-profit business is eligible. The ownership must be U.S. citizens.

Real estate purchases, improvements, or construction up to 90%: must be 51% or more occupied by the business in order to qualify

Business acquisitions up to 90%

Equipment purchases up to 90%

Terms: up to 25-years for real estate and up to 10-years of business acquisition, equipment, and working capital

Debt refinances up to 100%

Loan amounts up to $5 Million

SBA 504 Loan Program (Since 1958)

Real estate purchases, improvements, or construction up to 90%: must be 51% or more occupied by the business in order to qualify

Equipment purchases up to 90%

Debt refinances up to 100%

Terms: typical loan structure is 50% first mortgage (Bank) / 40% second mortgage (Community Development Company) / 10% from Borrower

Loan amounts up to $15 Million

SBA Loans Are Great For Commercial & Industrial Real Estate

Purchase land or buildings

Build, upgrade or renovate buildings

Purchase equipment with a service life of ten years or more

Refinance conventional debt

SBA Loans Are Very Popular With These Small Businesses

Manufacturing

Warehousing and distribution centers

Child care and daycare

Car washes

Repair shops

Auto dealerships

Hotels and motels

Restaurants

Gas stations

Bed and breakfasts

Franchises

Start-ups

Dental, medical, chiropractic and veterinary practices

Convalescent hospitals

SBA Loans Help A Lot Of Business Owners

Veterans

Minorities

Women

Eligible Equipment That Can Be Purchased With An SBA Loan

Manufacturing: hydraulic machines, overhead cranes, laser cutters

Hospitality: ovens, refrigerators, coffee makers

Medical: surgical tables, anesthesia machines, sterilizers

Financial: accounting systems, furniture, office equipment

Agriculture: tractors, generators, milking equipment

Construction: lifts, tools, safety gear

Education: textbooks, chalkboards, writing utensils

Entertainment: lighting, soundboards, recording equipment

Information Technology: cables, software, computer systems

Media: studio props and sets, video cameras, makeup

Retail: POS systems, shelving, office equipment

Transportation: fleet vehicles, forklifts, handicap lifts

Small Business Administration Loan Success Stories

Hair Restoration Clinic Expands & Saves Money With New Financing

Dr. Anderson already had some higher-rate equipment financing debt to the tune of about $393,000. He is a well-known hair restoration specialist in the Southeast that has two clinics. We were able to secure him a Small Business Association (SBA) loan to refinance his existing equipment debt of $393,000 and ...
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$395,000 SBA Loan Closed: Residential Painting Acquisition In Wisconsin

This Wisconsin borrower had no experience in the painting industry and had never owned a business before. This is usually a deal-breaker, but our lender was comfortable with the situation due to our client's strong cash flow. How We Secured The SBA Loan In Wisconsin! We were able to secure ...
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Start-Up Loan Closed For A Rosati’s Pizza Franchise In North Carolina

This scenario was referred to us by one of Rosati’s Pizza top franchise referral sources. Rosati’s Pizza is considered a Tier 1 franchise based out of the suburban Chicago area. For years that brand has been a staple in the Chicago market and now had grown from coast to coast ...
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