By Mark Feathers
6 SBA Selling Points e n
CEO and president
Small Business Capital LLC
Let clients know these strengths of Small Business Administration loans
Small businesses have been hit particularly hard by the eco- nomic downturn, and in today’s
market, even creditworthy customers
can struggle to find financing. Commercial mortgage brokers who work regularly with small-business clients know
there’s one financing source that can
offer nearly everything a small-business owner needs.
U.S. Small Business Administration
(SBA) loans offer some of the best
products with the best terms. In fact,
if you asked small-business owners to
dream up the ideal credit product for
their needs, an SBA loan might be exactly what they would create.
Here are six selling points you can
use to get clients on board with SBA
Successful small-business owners pay
close attention to the cash flow and
obligations of their business, so they
want to keep their payments as affordable as possible. The SBA offers that,
as well as a long amortization period
— as many as 10 years for equipment
and working capital, and as many as 25
years for real estate financing.
In addition, SBA loans are fully amor-
tizing. There are no balloon payments
in five or 10 years, meaning small-busi-
ness owners won’t have to go through
the loan application all over again.
2. Liberal underwriting
Liberal underwriting and qualification
terms are particularly important for
small-business owners. Often, these
businesses’ accountants utilize perfectly acceptable accelerated depreciation methods and other ways to
minimize a company’s taxes, but this
tends to make the company’s net income and profitability go down, which
in turn makes it harder to qualify for the
credit that could benefit the business.
SBA loans were created with the
needs of small businesses in mind, and
under writing standards reflect that.
3. Few prepay penalties
Although small-business owners may
be struggling now, when the economy
picks up, they may want to get debt off
their books. The SBA lets small-business owners avoid any prepayment
penalties on shorter-term loans —
which is particularly helpful for companies that want to get equipment loans
and other such debt off their balance
The prepayment penalty for lon-ger-term real estate loans is reduced
somewhat quickly, as well. For many
small-business owners, their business
property is their most valuable asset.
If small-business owners want to
refinance, they don’t want to be stuck
with a stiff penalty for more than a few
years after they have a new mortgage.
4. Credit counts less
Small-business owners frequently
use personal credit and resources as
sources of working capital when they’re
pinched for time or need to put more
capital into their business without going through a bank’s loan committee.
As a result, small-business owners may
have high balances and a high percentage of used personal credit.
This tends to drive down credit
scores, even though the small-business
owner often makes more income than
many W-2 salaried workers and also
frequently has a higher net worth.
Small-business owners need a program that doesn’t rely on credit scoring.
The SBA meets that need.
5. Financing in fees OK
Small-business owners are always trying to preserve their working capital for
the business and to put it to good use.
They need funding that lets loan fees
be financed into their new loan, instead
of paying fees out-of-pocket. SBA loans
can meet this need.
Small-business owners must have their
eyes on their long-term investment.
Often, they have spent years building a
book of business. When a couple of big
revenue-generating accounts are ready
to roll in, they often need additional
financing to fund expansion or other
needs. Many financing institutions,
however, won’t consider expected future profits.
In such cases, small-business owners need a program that can give them
some credit for the revenues and profitability they will earn in the near future,
rather than relying entirely on what financial statements say they made during the past few years. The SBA can fill
• • •
Commercial mortgage brokers who
work with small-business clients know
the SBA offers a great product. By
mastering the aforementioned selling
points, you can convince your clients of
the same — and perhaps sell them on a
product tailor-made for their needs. •
Mark Feathers is the founder, CEO and president of Small Business Capital LLC. He has
20 years of Small Business Administration
lending experience. Small Business Capital
is a national, SBA-licensed nonbank direct
lender and has wholesale-lending programs
for mortgage brokers. Reach Feathers at
(650) 559-5601 or firstname.lastname@example.org.
7th- Largest SBA Lender in the Nation
(888) 392-5265 ;; www.bankexcel.com
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Member FDIC, Equal Housing Lender, SBA Preferred Lender