The new federal stimulus package allocated more money for small businesses. But how do you get the money? Even though lending is tighter than before, the application process is really simple.
Typically, Small Business Administration loans are thought of as easier to get. That's not necessarily true. They just assist business owners or entrepreneurs in obtaining loans they may not qualify for on their own.
The process is the same. You'll need to create a strong business plan or make sure your current one reflects your goals and then apply though an SBA authorized bank. Credit scores are very important now, as well as collateral and down payments.
Justin Roof, Assistant Vice President and Commercial Relationship First Citizens Bank said they are still lending 95% loans to qualified borrowers.
"It's not necessarily that our guidelines are any tighter,” said Roof. “It's just a matter of where borrowers had opportunities to get cash out of or have collateral in, they really just don't have that now because of where values are."
There are several SBA programs which include: The 7-A. The SBA contributes 90% while the customer brings 10% to the table. The 7-A is used for capital expenditures such as expansions. The 504 loan requires the bank to contribute 50%, the SAB contributes 40% while the borrower contributes 10%. Collateral is important with this loan. Another loan type is the SC-CAP loan. It requires the borrower and the bank to pay fees up-front that are deposited in a reserve fund.
To find out more on SBA loans, check with an SBA certified bank. The Conway Chamber of Commerce will also host an SBA workshop April 23rd. http://www.conwayscchamber.com for more information.
Thursday, scnow.com will host another Ask An Expert chat. This week you can ask your banking questions with a focus on lending for consumers and businesses. Kelly Britt-Cauble, Assistant Vice President and Retail Sales Manager will host the chat from 9am to 2pm. You can find the chat under the keywords: Ask An Expert.
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