As of 2017, an SBA lending rule change has been put in place for SBA franchise loans. All franchisors must sign an addendum with the franchise borrower in order for the borrower to secure an SBA loan for the franchise. This addendum supersedes the franchise agreement. Franchisors are no longer required to be on the franchise registry. Read this FAQ to learn more.
As a small business owner, you have undoubtedly invested a lot of time, money, and effort into the success of your venture. When a disaster happens, it can be a matter of minutes for all of your investment and hard work to come undone. You can, however, protect your business from these situations by planning ahead and creating a business … Read More
Finding financing presents a challenging obstacle to overcome when starting a business. The Small Business Administration (SBA) offers financing assistance for starting a business when owners experience difficulties qualifying for a traditional bank loan. SBA 7a loans provide qualified borrowers in the start-up phase with basic, secured loans to start a small business. While the SBA does not provide direct … Read More
SBA Lenders Turn To SBSS For Underwriting Loans Regarding the Coleman Report last Tuesday, the SBA will be eliminating underwriting of SLA Loans starting July 1, 2014. The SBA is now allowing lenders to make deal decisions solely on a Small Business Credit Score. Editor; Bob Coleman goes on to explain that the significant changes for underwriting SBA loans … Read More
Does SBA’s New Lender Risk Rating System Really Rate Risk of Loss to the Government & How Can it be Structured to Accomplish SBA’s Mandate? By: Bob Tannenhauser The Small Business Administration unveiled its revised system for risk rating lenders on April 29, 2014 in the Federal Register. The expressed purpose of the system is to assist SBA in … Read More
What are the Effects of the SBA’s Elimination of the “Personal Resources Test” on Small Business Borrowing? The Personal Resources Test for SBA loans set forth a formula requiring any 20%-or-greater owners of businesses to use a portion of their personal resources to reduce the SBA’s share of the financing requested. The formula, based upon loan size, required the owners … Read More
SBA announced that the Patriot Express Loan Program will end on December 31, 2013 (Notice 5000-1293). The failure to extend this program perhaps was a result of a GAO report to Congress in September 2013 (GAO-13-727) criticizing SBA’s evaluation of the program and the high default rates. The GAO report compared Patriot loans with the regular 7a program and the … Read More
As a general rule the lender must show the ability to repay the loan from the “cash flow” of the business. Cash Flow means earnings before interest, taxes, depreciation and amortization (EBITDA). The cash flow must be sufficient to cover total service including both the SBA loan and other debt. The SOP now provides that the debt service coverage ratio … Read More
Commencing in 2014 a 504 loan can, under certain circumstances, be refinanced with a SBA 7a loan. SOP 50 10 5 (F) Subpart B Chapter 2 Section IV (E) (8) provides in part that a 7(a) loan may be used to finance an existing 504 Loan if both the underlying loan (“Third Party Loan”) and the 504 loan are being … Read More
Hello, all veterans out there–don’t forget that starting January 1, 2014, the SBA upfront fees for all SBA Express Loans will be ZERO. That’s right, all small business loans under $350,000 made under the SBA’s Express Loan Program will be ZERO. So if you’re thinking about getting a small business loan, NOW is the time to act.
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