Choosing a Financing Partner – By Frank M. Corso, Jr.

There are many lenders who promote themselves as “small business friendly” pontificating about their willingness to lend money to small businesses. In reality, however, whether they participate as an approved lender in the government-guaranteed Small Business Administration (SBA) loan programs or in conventional financing, many banks and non-bank lenders will not finance small businesses. Why? Because each lender has their own policies and procedures on what industry they will lend to, age of the business, financial condition of the business, location of the business, whether it is a startup, existing business or a franchise.

Although many small businesses do not meet these requirements, they are good candidates for startup and or expansion loans. These businesses must, however, be presented as such to a potential financing source. In securing financing, it is important for the borrower to:

* Determine the use of loan proceeds and feasibility of the loan.

* Prepare a positive business plan for loan purposes, cash flow projections with assumptions and all loan documents. (SBA/Bank)

* Choose a lender that has an appetite for the industry, size of the loan, age of the business and location of the business venture.

It is important to choose a lender that has experience in the industry you are in. If one is to engage an SBA participating lender, it is best to choose a Preferred SBA lender. The reason is that they have the ability to do all the underwriting of the loan themselves without the SBA being involved in the underwriting process. Every lender is different. Some lenders will do startup business loans and many will not. Startup means different things to different lenders; it is a business opening its doors tomorrow and to others, it is a business that is under three years of age. It is the obligation of the borrower to do its due diligence in investigating a lender. In the lending world, loans can be secured form banks and non-banks. Banks have internal policies which may be difficult to deal with and have restrictions. Banks are often limited to their geography in assisting borrowers outside of specified territories and shy away from smaller transactions.

On the other hand, non-bank lenders can be more creative in lending money and are free of many of the regulatory constraints and rigid loan evaluation procedures associated with banks.

Once a decision is made to borrow money, several factors must be considered. How much money is needed and for what purposes (i.e. working capital, inventory, leasehold improvements, acquiring real estate, advertising, production/manufacturing, professional fees, franchise fee, etc.)? The borrower must demonstrate the ability to repay the loan which may include the historical financials of the business or cash flow projections for a startup. Typical loan terms from a bank, 4-7 years to repay for working capital and other soft costs. If an SBA loan, 7-10 years to repay. If real estate is involved, the loan can go to 25-30 years. Interest rates are based on the use of the loan proceeds.

ABOUT:

Frank Corso Inc. is a national business advisory firm. It acts as an intermediary between the client and the lending entities and develops the complete loan package request for the client and chooses the lender based upon the clients needs.

Frank M. Corso, Jr. is a nationally recognized expert and leader in economic and business development, business financing, franchising and more. In addition to work involving his firm, Frank has served as member of the Board of Directors for American Kidney Fund (Rockville, Maryland), World Food Program USA/U.N. World Food Program (Washington, D.C., Long Island Transportation Management (Melville, New York), Operations-Initiative Foundation (Hicksville, New York), Caregiver Coalition Fund of America (Melville, New York) et al. Frank served as Financial Editor of Technology Business Magazine, contributing writer to several business publications including Successful Franchising Magazine, Biz Magazine et al. Host of Dollars & Sense a half business talk show. Founder of several business entities.

Frank M. Corso, Jr. CEO

https://www.corsobusinessgroup.com/contact

516-356-6537

E-Mail: [email protected]