Weekly SBA stories, news, & tips from two industry experts for the SBA lending industry (Click image above for playlist)
The Significance of Business Experience When Buying a Business
Buying a business is a significant undertaking that requires careful consideration and being strategic when making decisions. One of the key factors that can impact success is the buyer’s level of business experience.
Individuals with prior business experience should be familiar with managing day-to-day operations, finances, and any regulatory issues that come up. These Buyers with experience are better equipped to assess the strengths and weaknesses of a business, enabling them to identify opportunities for growth and areas that may require improvement.
Industry dynamics is a benefit of having experience. Different industries have different trends and regulations. Individuals with prior exposure within that industry are better positioned to grasp these intricacies, reducing the learning curve associated with the business. This not only streamlines the due diligence process but also enables buyers to make more informed decisions regarding the compatibility of their skills and expertise with the target business. Understanding the financials is a critical aspect of business ownership, and individuals with prior business experience, including management, typically possess a better understanding of financial principles. Understanding financial statements, the feasibility of investment decisions, and implementing sound fiscal strategies lead to the business’s success.
Risk management is also a part of business experience in which entrepreneurs with a history of business ownership have encountered challenges and uncertainties like what was experienced in 2008 and 2010. This exposure gives them the ability to mitigate risks effectively. During the business buying process, experienced buyers can identify potential pitfalls, develop contingency plans, and navigate uncertainties with a strategic mindset. Having business experience is paramount when buying a business. It provides a practical understanding of business operations, confidence in tackling issues, strengthens financial understanding, and improves risk management capabilities.
SBA Lender’s like Gesa Credit Union ask for a resume when applying for a loan. The credit union wants to make sure that a doctor doesn’t want to open a restaurant or a construction company owner doesn’t want to own an Adult Family Home.
If you find you have some management experience, but as much as you would like, I encourage you to look at franchise options as those provide additional business structures who help you along the way.
Working capital is about to get more flexible with a NEW SBA Program
By Paul Long 7/3/2024
The SBA recently unveiled a pilot program designed to address a critical need for many small businesses, getting access to working capital. The new Working Capital Program (WCP) aims to provide easier access to funds for businesses struggling with cash flow, supporting growth and resilience.
All businesses face tight cash flow during their ownership. Daily expenses can outpace incoming revenue due to inflation or unexpected expenses. This can hinder the businesses’ ability to make payroll or pay vendors. The SBA WCP addresses this challenge by offering government-backed credit lines of up to $5 million.
As of the date of this article the current SBA loan programs include SBA Express Lines of Credit which are up to $500,000 and the Working Capital CapLine which goes up to $5 Million but lenders are nervous out this program due to the requirements placed by the SBA.
Here are the features of this new program:
- Flexibility: A flexible annual SBA upfront guaranty fee. This allows businesses to customize the loan to their specific needs and reduces the cost of borrowing for shorter-term financing.
- Focus on Assets: The program is categorized as an Asset-Based Working Capital Loan. This means businesses can leverage their existing assets, like inventory or receivables, as collateral to secure the loan.
- Supporting Export and Domestic Sales: Unlike some existing programs, the WCP caters to both domestic and international sales under one facility.
- Currently an export line of credit can only be used for exporting.
- Home Energy Rebate Program Tie-In: For companies involved in the Inflation Reduction Act’s Home Energy Rebate Programs, the WCP offers an additional solution. It can help them scale up their capacity and mobilize services to meet the program’s demands.
Pilot Program and Next Steps
The WCP is currently in its pilot phase, with the official launch happening later in 2024. The SBA is finalizing program details, which will be available on their website. Lenders like Gesa Credit Union will participate in this new program.
Need a Loan? Get Expert Tips from a Business Banker
I need a loan and I have no idea what the banker is looking for!” Well look no further but Paul Long will show you tips from an SBA Lender on how to get through the SBA loan process and what banks and credit unions look for to approve you.
SBA Expert Paul Long has a Video for Everything
Since the week after his 16th birthday, Paul Long has been in the banking industry. After working his way from Wells Fargo Bank Teller to a district manager, Paul transitioned to business banking and on to SBA.
In this episode, Ray sits down with Paul to discuss how having a strong team helps you build a successful SBA division, how customer service and personal branding makes a world of difference, and the importance of giving value without expecting anything in return.
YouTube https://youtu.be/6xgocvp150w
Apple Podcasts https://podcasts.apple.com/us/podcast/sba-expert-paul-long-has-a-video-for-everything/id1485109358?i=1000615252694
Spotify https://open.spotify.com/episode/4R83mQAxsUnpP4IRTS4rNo?si=nSWJGvQzRFCUu2o3l0wNYw
Paul on Will Talks Biz Podcast- Your Guide to SBA Loans
https://willtalksbiz.com/2023/03/15/your-guide-to-sba-loans/
“The lending process is a mystery, but I’m here to peel back the onion and dive deep into the details to help educate people.”
In this episode I welcome Paul Long, a 26-year banking industry veteran and SBA lending manager at a local credit union. He is on a mission to reveal the mysteries of the lending process and help small business owners understand it. Today he helps us by dispelling some of the myths and misconceptions about SBA loans.
After years of working in banking, Paul decided to focus on business banking, specializing in SBA loans. He found a love for educating business owners about the benefits of loan programs like SBA, which require lower down payments and longer terms than traditional loans. There are many financial resources small business owners tend to overlook, like getting help restructuring their balance sheets, purchasing equipment, acquiring another business, and purchasing commercial real estate.
Now Paul works for a local credit union as an SBA lending manager. He is passionate about helping businesses grow, expand, and acquire a business. He helps business owners bust the myth that SBA loans take too long, and educates them on the programs available, and understand how to qualify.
During our conversation Paul acts as a guide to the benefits of SBA loans and how they can help your small business grow.
In this episode, you will:
- Discover the mystery behind the bank lending process.
- Learn how to qualify for an SBA loan.
- Get the facts on PPP and EIDL programs.
Paul is dedicated to helping businesses succeed, and offers his expertise and guidance on his website and LinkedIn.
“SBA loans provide lower down payments and longer terms to help small businesses grow, expand, and acquire a business.”
Episode Highlights:
[00:04:02] Paul: The biggest thing with SBA is you can have longer terms and lower down payments. [00:05:57] What the government wants to do with SBA is to help small businesses grow, expand, and acquire a business. It is for owner occupied businesses. That creates tax revenue that creates, hopefully, more jobs for the business. [00:06:40] For the most part, most businesses qualify. Anything adult related in a sexual nature is out. Anything religious is ineligible, anything that’s investor is ineligible. [00:11:30] Paul: Make sure your numbers are in line. Make sure that you have up to date financials and your tax returns are filed. Every small business owner should have a relationship with a business banker or commercial banker. There’s pros and cons to each program, so you got to make sure that which program works for you. [00:15:38] I primarily work with business owners in Washington, Oregon and Idaho. If you are in those states and you need support and help in those areas, definitely get in contact.Connect with Paul:
https://www.linkedin.com/in/ptlong/
Connect with Will:
Book I Can’t Read: A Guide to Success Through Failure
Email: Will@willtalksbiz.com
LinkedIn: https://www.linkedin.com/william-manzanares
Paul on Scale your Small Business Podcast with Jillian Flodstrom
South Sound Connection Podcast- Creating Videos and Content for Your Business
It was my pleasure to be on South Sound Copnnection Podcast. I am talking about Creating Videos and Content for your business!
How does a banker make decisions (podcast)
Top 5 things a commercial real estate broker should look for in a commercial lender
Partnering with a commercial lender is critical to closing a deal. Lender’s marketing efforts mean nothing if the lender cannot back up their claims. Brokers want to work with lending partners with proven track record whom they can trust with no surprises, access to product options and the ability to close on time.
Here are 5 key things to look for:
- Reliable pre-qualifications. Unlike residential lending, commercial loans can only be pre-qualified as the property is very important in the underwriting. Approvals are only given after an appraisal is received and reviewed. It is important to have a lender that can turn around a term sheet/pre-qualification in 24-48 hours after thoroughly reviewing the borrower’s financials. You also need to be able to trust the lender did enough research before issuing the term sheet, so you don’t have any surprises before closing that could have been prevented.
- On-time closings. Turning a loan around requires a certain amount of handholding by the lender with the client. Pulling together all documentation and processing it requires a high level of competence across the institution. A seasoned lender knows where the pitfalls are, and how to avoid them.
- Products. Because you have a client with a wide range of needs, you need a lender that has different options for loan products. Aside from the standard Conventional portfolio, rehab, construction, SBA 504, SBA 7a and even USDA programs. You need a lender that has knowledge of all these products and can think creatively for your client.
- Superior customer service. Expectations naturally run high when one professional hands off a client to another. A commercial broker only does a few purchase transactions a year, you want a lender that shares your commitment to providing great service. A knowledgeable lender who takes the time to explain the process of what is needed for a smooth closing. You want a lender that will pick up their phone and always returns calls quickly. You also want a lender you can depend on to communicate proactively by keeping YOU and the client up to date on the progress of their loan.
- Transparency. Lastly, you want to work with a lender you can count on. One that won’t fail to disclose an issue as soon as it arises and has an alternative to remedy the situation whenever possible. Trust is very important. When something goes wrong like a closing is delayed or, worse your client’s loan application is declined that the lender alerts you immediately, takes responsibility, and can explain the institutions decision to you and your client. Therefore, you need to find a lender with lending authority, so you are talking with a decision maker.
Overall– Personal experience matters a lot when agents recommend a lender to a client. More than any incentive brought to the table, brokers need to feel confident with who they partner with.