You're unlikely to get an SBA government-guaranteed loan if you already have too much debt, but there are ways to improve your chances
A U.S. Small Business Administration loan is actually a private loan guaranteed by the government and made to small companies and startup entrepreneurs with viable business plans who couldn't get commercial loans. The borrower must undergo a criminal background check and demonstrate creditworthiness. If you have a history of insolvency or are perceived to be a credit risk, you're unlikely to qualify for a loan of any kind.
If you have good credit aside from the loan you've taken out to help your son, you'd be better off applying for the SBA loan first and then filing for personal bankruptcy later if necessary, says Steve Berman, a business bankruptcy attorney based in Tampa. "You'll need to give the bank a financial statement and a business plan. Be careful not to make any fraudulent misrepresentations to them. They may look at your situation and ask if you intend to file for bankruptcy, and if you do, you'd have to disclose that and it would probably kill the loan," says Berman. If the loan officer does not ask you about the possibility of a future bankruptcy, don't volunteer that information, he adds.
May Be Possible to Avoid Bankruptcy
You might try to work through your financial difficulty first and then apply for the loan, using the extra time to build up your construction business while you continue with your full-time employment. It's possible you may be able to avoid bankruptcy. "Many times, medical providers will write down bills in exchange for lump-sum payments," Berman says. "If your son owes $10,000 and you can make a lump-sum payment of $5,000 or $6,000, they may be willing to write down the remainder of the debt, especially since you are paying for your son's bills and you're in difficult straits." Sometimes medical providers will provide interest-free payment terms as well, he notes.
If you do get the SBA loan and then find you eventually have to declare personal bankruptcy after all, you will not automatically be declared in default on the business loan. "As long as you're still making payments and you haven't breached the other provisions of the loan agreement, they can't cancel the loan on you just because you file for bankruptcy," Berman says.
The bottom line: The more financially precarious your situation, the more difficult it will be for you to meet your current obligations, let alone make a payment on a new loan. If you're heavily in debt or highly leveraged in your assets, you're not likely to get a small business loan—bankruptcy or no.
Source:http://www.businessweek.com/smallbiz/content/may2008/
Saturday, May 31, 2008
Friday, May 23, 2008
Small Business Loans: Types And Eligibility Criteria
Initiating and managing a small business needs proper planning, coordination, talent, intelligence and primarily strong capital management skills. To start up and maintain a business, a budding entrepreneur needs adequate capital support for which he/she often resorts to small business loans. In order to promote small businesses many banking as well as non-banking companies have come up with various small business loan schemes to satisfy the diverse needs of their customers.
SBA Loans: The United States Small Business Administration (SBA) offers a variety of loan programs for small business owners.
Basic 7(a) Loan Guaranty program serves the start-up and existing small businesses and other commercial lending institutions. These loans are provided by participating lenders, which mostly comprises of American banks as well as some non-bankers who are associated with SBA 7(a) program.
The Certified Development Company (CDC) 504 Loan program is targeted for those small businesses that wish to acquire real estate/ machinery/ equipment for expansion and modernization purposes. These small business loans are provided in a long-term, fixed-rate financing basis by Certified development companies set up to facilitate the growth and development of their communities and regions.
Microloan, a 7(m) loan program supports the financial needs of small businesses and not-for-profit child-care centers. This loan program can be availed to fulfill the working capital needs and other needs like inventory, furniture, fixtures and other machinery/ equipments. Under this program the small business companies can get a short-term loan of up to $35,000.
Loan Prequalification program offers loans up to $250000 for which the loan applications are scrutinized and sanctioned by SBA themselves. Rather than depending on the applicant’s assets, the program primarily focuses on the overall character and reliability of an applicant.
Secured Loans: The amount of such loans directly depends on the value of the assets held by an applicant. In case of any failure in repayment, the applicant’s assets may be forfeited to the lender. Due to increased security of money lend under this scheme, the small business owners can avail of benefits like better rates and better repayment options. Apart from that a longer repayment period cuts down upon the monthly repayments helping the small business owners to manage their finances in a better way.
Unsecured Loans: These loans are without any security/ collateral and are focused entirely on the character and reliability of an applicant. However, the rate of interest in this case is considerably higher than the other options.
Bad Credit Loans: Small business owners with bad or poor credit history can go for Bad credit loans. Under this scheme the lenders may charge a higher rate of interest because of the increased risk associated with the money lend due to the applicant’s poor credit history.
Small business loans for Woman: Due to an increase in women leading small businesses, many banking and non-banking institutions are providing special loans that supports women financially to fulfill their business objective along with some additional benefits.
Small business owners can also go in for business cash advance, which is a better and easier method of finance support. Unlike loans, a business cash advance does not require a security or a collateral. The repayment solely depends on the future credit card sales of your product and the loan amount is repaid automatically through Visa/ Master cards sales. As the repayment is directly dependent on the revenue earned by the borrower through the credit cards sales, a business cash advance scheme is preferably a much better alternative than small business loans.
Source:http://ezinearticles.com/?Small-Business-Loans:-Types-And-Eligibility-Criteria&id=317855
SBA Loans: The United States Small Business Administration (SBA) offers a variety of loan programs for small business owners.
Basic 7(a) Loan Guaranty program serves the start-up and existing small businesses and other commercial lending institutions. These loans are provided by participating lenders, which mostly comprises of American banks as well as some non-bankers who are associated with SBA 7(a) program.
The Certified Development Company (CDC) 504 Loan program is targeted for those small businesses that wish to acquire real estate/ machinery/ equipment for expansion and modernization purposes. These small business loans are provided in a long-term, fixed-rate financing basis by Certified development companies set up to facilitate the growth and development of their communities and regions.
Microloan, a 7(m) loan program supports the financial needs of small businesses and not-for-profit child-care centers. This loan program can be availed to fulfill the working capital needs and other needs like inventory, furniture, fixtures and other machinery/ equipments. Under this program the small business companies can get a short-term loan of up to $35,000.
Loan Prequalification program offers loans up to $250000 for which the loan applications are scrutinized and sanctioned by SBA themselves. Rather than depending on the applicant’s assets, the program primarily focuses on the overall character and reliability of an applicant.
Secured Loans: The amount of such loans directly depends on the value of the assets held by an applicant. In case of any failure in repayment, the applicant’s assets may be forfeited to the lender. Due to increased security of money lend under this scheme, the small business owners can avail of benefits like better rates and better repayment options. Apart from that a longer repayment period cuts down upon the monthly repayments helping the small business owners to manage their finances in a better way.
Unsecured Loans: These loans are without any security/ collateral and are focused entirely on the character and reliability of an applicant. However, the rate of interest in this case is considerably higher than the other options.
Bad Credit Loans: Small business owners with bad or poor credit history can go for Bad credit loans. Under this scheme the lenders may charge a higher rate of interest because of the increased risk associated with the money lend due to the applicant’s poor credit history.
Small business loans for Woman: Due to an increase in women leading small businesses, many banking and non-banking institutions are providing special loans that supports women financially to fulfill their business objective along with some additional benefits.
Small business owners can also go in for business cash advance, which is a better and easier method of finance support. Unlike loans, a business cash advance does not require a security or a collateral. The repayment solely depends on the future credit card sales of your product and the loan amount is repaid automatically through Visa/ Master cards sales. As the repayment is directly dependent on the revenue earned by the borrower through the credit cards sales, a business cash advance scheme is preferably a much better alternative than small business loans.
Source:http://ezinearticles.com/?Small-Business-Loans:-Types-And-Eligibility-Criteria&id=317855
Friday, May 16, 2008
Better financing for small and micro business sector in Jamaica
Published on Friday, May 16, 2008
KINGSTON, Jamaica (JIS): Minister of Industry, Investment and Commerce, Karl Samuda, has said that the small and micro business sector in Jamaica will be aided with the provision of better financing options in order to ensure the sustainable development of the sector.
Industry, Commerce & Investment Minister,
Karl Samuda. JIS Photo
Making his presentation to the 2008/09 Sectoral Debate in the House of Representatives on Tuesday, Samuda said that "this year will mark a turning point in the sustainable development of this vital sector."
He informed that $5.5 billion will be made available for development and expansion projects and that the assistance includes contributions from the private sector.
The Development Bank of Jamaica (DBJ) will be making available, a $1 billion line of credit, which will be targeted at businesses engaged in agricultural production and processing, retooling and re-engineering, manufacturing operations, tourism, non-metallic mining, and information technology, among others. The funds will be made available through approved financial institutions.
Loans will range between $50,000 and $15 million and security and the repayment period will vary with the size of the loan.
A further $1 billion will be provided through the DBJ Petrocaribe small and medium enterprises energy fund to be used for retrofitting businesses to achieve energy efficiency and conservation and for alternative energy projects, with specific emphasis on electricity conservation and the production of solar energy.
The Industry Minister also informed that $100 million had been committed to the disabled community for businesses. "That is a guaranteed facility and it does not limit the amount that the disabled community can access, but it will not be less than $100 million, but they may go beyond that, depending on the projects," he pointed out.
In addition, the Jamaica Business Development Centre (JBDC) will be introducing a new financial product to provide financial assistance to a special group of 'un-banked' micro and small businesses.
"This product must be seen as improving 'financial incubation' for a targeted group of micro and small businesses," Samuda told the House, noting that under this programme, financial assistance should be provided only to clients, who have been provided with business development services such as training and business assessment through the JBDC's island-wide network of business centres.
He informed that the target group comprises micro and small business entities and business groups or clusters in the productive sector, primarily. The JBDC, he noted, will apply creative lending methodologies and will not use traditional collateral as a basis on which to give the loans.
The interest rate on the loans will be 10 per cent and it is expected that approximately 2,500 previously un-banked enterprises will be served during the first year of operation.
In the meantime, Samuda informed that the JBDC has applied to the DBJ to be accredited as an approved financial institution. The company will also apply to the National Insurance Fund (NIF) for accreditation in order to access funds from the NIF. "In other words, the JBDC will be facilitating entities that are now unable to have any form of access to financing," Mr. Samuda stated.
The Minister commended the Jamaica National Micro Credit Programme, through which 35,000 loans averaging $23,000 per loan, was made available in 2007/2008, to persons without collateral.
He also expressed gratitude for the support received from the European Union through the Private Sector Development Programme (PSDP), which is a five-year technical assistance programme, initiated in 2004.
The programme is geared towards enhancing the competitiveness of the private sector in response to the challenges of increased globalization and liberalization of markets. The PSDP has also funded important research work at the University of the West Indies, which will inform the preparation of a small business policy.
Source:http://www.caribbeannetnews.com/news-7854--9-9--.html
KINGSTON, Jamaica (JIS): Minister of Industry, Investment and Commerce, Karl Samuda, has said that the small and micro business sector in Jamaica will be aided with the provision of better financing options in order to ensure the sustainable development of the sector.
Industry, Commerce & Investment Minister,
Karl Samuda. JIS Photo
Making his presentation to the 2008/09 Sectoral Debate in the House of Representatives on Tuesday, Samuda said that "this year will mark a turning point in the sustainable development of this vital sector."
He informed that $5.5 billion will be made available for development and expansion projects and that the assistance includes contributions from the private sector.
The Development Bank of Jamaica (DBJ) will be making available, a $1 billion line of credit, which will be targeted at businesses engaged in agricultural production and processing, retooling and re-engineering, manufacturing operations, tourism, non-metallic mining, and information technology, among others. The funds will be made available through approved financial institutions.
Loans will range between $50,000 and $15 million and security and the repayment period will vary with the size of the loan.
A further $1 billion will be provided through the DBJ Petrocaribe small and medium enterprises energy fund to be used for retrofitting businesses to achieve energy efficiency and conservation and for alternative energy projects, with specific emphasis on electricity conservation and the production of solar energy.
The Industry Minister also informed that $100 million had been committed to the disabled community for businesses. "That is a guaranteed facility and it does not limit the amount that the disabled community can access, but it will not be less than $100 million, but they may go beyond that, depending on the projects," he pointed out.
In addition, the Jamaica Business Development Centre (JBDC) will be introducing a new financial product to provide financial assistance to a special group of 'un-banked' micro and small businesses.
"This product must be seen as improving 'financial incubation' for a targeted group of micro and small businesses," Samuda told the House, noting that under this programme, financial assistance should be provided only to clients, who have been provided with business development services such as training and business assessment through the JBDC's island-wide network of business centres.
He informed that the target group comprises micro and small business entities and business groups or clusters in the productive sector, primarily. The JBDC, he noted, will apply creative lending methodologies and will not use traditional collateral as a basis on which to give the loans.
The interest rate on the loans will be 10 per cent and it is expected that approximately 2,500 previously un-banked enterprises will be served during the first year of operation.
In the meantime, Samuda informed that the JBDC has applied to the DBJ to be accredited as an approved financial institution. The company will also apply to the National Insurance Fund (NIF) for accreditation in order to access funds from the NIF. "In other words, the JBDC will be facilitating entities that are now unable to have any form of access to financing," Mr. Samuda stated.
The Minister commended the Jamaica National Micro Credit Programme, through which 35,000 loans averaging $23,000 per loan, was made available in 2007/2008, to persons without collateral.
He also expressed gratitude for the support received from the European Union through the Private Sector Development Programme (PSDP), which is a five-year technical assistance programme, initiated in 2004.
The programme is geared towards enhancing the competitiveness of the private sector in response to the challenges of increased globalization and liberalization of markets. The PSDP has also funded important research work at the University of the West Indies, which will inform the preparation of a small business policy.
Source:http://www.caribbeannetnews.com/news-7854--9-9--.html
Tuesday, May 13, 2008
Minority Small Business Loans
The first procedure for getting Minority small business loans is to submit an appropriate application form of the financial institutions/banks. It is worth mentioning that there are different types of application forms for different categories of grants. The information furnished in the application covers, inter alia, the following: the name and address of the borrower and his establishment; the details of the borrowers business; and the nature and amount of security offered.
The application form has to be supported by various ancillary statements like the financial statements and financial projections of the firm. The application is then processed by the financial institution-giving grant. This primarily involves an examination of the factors like ability, integrity and experience of the borrower in the particular business. General prospects of the borrower’s business, purpose of grant, requirement of the borrower and its reasonableness are also taken into perspective.
Once the application is duly processed, it is put up for sanction to the appropriate authority. If the sanction is given by the appropriate authority along with the sanction of grant, the bank specifies the terms and conditions applicable to the grant. These usually cover the amount of the loan or the maximum limit of the grant, the nature of the grant, the period for which the grant will be valid, the rate of interest applicable to the grant, the primary security to be charged, the insurance of the security, the details of collateral security, if any, to be provided, and the margin to be maintained.
The detailed appraisal of the project is done by the lead institution. The appraisal covers the marketing, technical, financial, managerial and economic aspects. The appraisal memorandum is normally prepared within two months after site inspection and placed before the Senior Executive Meeting (SEM) for a decision about approval of the project and determining the sharing arrangement among the institutions. Once a favorable decision is taken at the SEM forum and the sharing arrangement worked out, the case is referred to the Board of Directors of the lead financial institution. After the Board of Directors of the lead financial institution approves the proposal, a financial letter of sanction is issued to the borrower.
Source:http://ezinearticles.com/?Minority-Small-Business-Loans&id=232231
The application form has to be supported by various ancillary statements like the financial statements and financial projections of the firm. The application is then processed by the financial institution-giving grant. This primarily involves an examination of the factors like ability, integrity and experience of the borrower in the particular business. General prospects of the borrower’s business, purpose of grant, requirement of the borrower and its reasonableness are also taken into perspective.
Once the application is duly processed, it is put up for sanction to the appropriate authority. If the sanction is given by the appropriate authority along with the sanction of grant, the bank specifies the terms and conditions applicable to the grant. These usually cover the amount of the loan or the maximum limit of the grant, the nature of the grant, the period for which the grant will be valid, the rate of interest applicable to the grant, the primary security to be charged, the insurance of the security, the details of collateral security, if any, to be provided, and the margin to be maintained.
The detailed appraisal of the project is done by the lead institution. The appraisal covers the marketing, technical, financial, managerial and economic aspects. The appraisal memorandum is normally prepared within two months after site inspection and placed before the Senior Executive Meeting (SEM) for a decision about approval of the project and determining the sharing arrangement among the institutions. Once a favorable decision is taken at the SEM forum and the sharing arrangement worked out, the case is referred to the Board of Directors of the lead financial institution. After the Board of Directors of the lead financial institution approves the proposal, a financial letter of sanction is issued to the borrower.
Source:http://ezinearticles.com/?Minority-Small-Business-Loans&id=232231
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