Tag Archives: subject

7 SBA Loan Myths (Page 1 of 3)

Most small business owners have considered financing at some point in the life of their business. You may have considered expansion, buying new equipment, more inventories, purchasing real estate, or just looking for a new capital infusion. But the confusion surrounding SBA loans may perplex or frustrate even the most astute entrepreneur. Conflicting information from your trusted advisors or the internet may not help to bring you closer to separating fact from fiction.

There are many myths surrounding SBA loans. Some of these myths are substantial and strong enough to discourage a small business owner from expanding, getting out from under onerous debt, or even staying in business. Understanding how an SBA loan works and how to successfully get one for your business is a matter of separating the facts from the myths. You may recognize yourself in some of the following misconceptions of SBA loans. You will finish this article more informed and in possession of the facts. The facts regarding SBA loans can help you to be a better, more successful small business owner.

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA recognizes that small business is critical to America’s economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace. Although SBA has grown and evolved in the years since it was established in 1953, the bottom line mission remains the same. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.

THE 7 MYTHS

Myth 1- All banks evaluate the risks of a SBA loan request with the same viewpoint.

Financial Fact- Although all banks are subject to the same SBA Guidelines, the rules are subject to different interpretations with respect to analyzing a particular loan request. Some banks may be willing to take greater risks. Some banks will take a more optimistic evaluation of the facts and your business’ future success. Therefore, choosing the best bank for your SBA loan needs can make the difference between loan approval and denial.

Myth 2- All banks offer the exact same types of financing for SBA loans.

Financial Fact- Loan pricing and structure can vary substantially at different banks. Interest rates on SBA loans are based on the prime rate plus a margin. Some banks are more competitive in price to be leaders in SBA lending. Some banks will carve-out a provision for accounts receivable and inventory financing from their loan agreement to permit additional third party commercial financing in addition to the SBA loan. For the same loan, some banks will require additional collateral guarantees, such as a lien on your house. Evaluating the adequacy of such additional collateral guarantees is also subject to interpretation.

5 Ways to Start with No Money and No Credit?

One of the Myth’s of real estate is that you have to have money. This is flat out not true, you can absolutely do deals with no money and credit. There are a few precautions I want to mention, especially for beginners before explaining how to do deals with no money and no credit.

Having money and credit can certainly make it easier to do deals. It is crucial however to make sure the deal still meets your criteria. At no point in time should you bend your criteria and make the deal work by putting in your own money. For instance, if you are considering putting in 10% of your own money to make it meet your 70% LTV criteria, you should lower your offer or pass on the deal. The risk has to be warranted, in fact, all deals should be good enough where you do not have to use any of your own money. Using your own money should just sweatin the deal and improve the return without unneeded risks.

Here are some ways you can do deals with No Money and No Credit.

Use Private Money – Cash is king and having private money backing can allow you to do deals without any of your own money
Partner – If you have a strong business plan with solid exit strategies and a successful track record there is a ton of money out there to fund 100% of your deals. Make it a win-win for your partners and make it happen.
Find deals with incredible numbers – If you are an expert at finding incredible deals, doing and exiting the deals then people will fight over funding your deals.
Wholesale, Bird Dog – There is no risk, money or credit needed in getting a deal under contract or locating deals for investors.
Subject To, Seller Financing, Lease Options – Taking title to a property subject to the seller’s existing mortgage, getting the seller to carry financing or lease optioning a property are ways to do no money no credit deals.

Real Return Real Estate™ for years has bought property at extreme discounts, sells and rents with tremendous cash flow. We also provide FREE tips, articles, guides and Educational Webinars. Visit our site