“Nothing Down!” shouts the headline in boldface, large letters. Yet, it qualifies who the bank says is worthy for this special business loan. “Medical doctors, CPAs, attorneys, veterinarian practices and dentists,” are on the list. However, “Chiropractors are not eligible” for HomeBanc’s “Professional Perks Program.”
“We like professionals, business acquisitions and franchise lending,” says John Hanlon, the bank’s vice president, about his Professional Perks and other small business lending programs. HomeBanc is Tampa, Fla.-based and Hanlon specializes in small-business loans that are guaranteed by the U.S. Small Business Administration.
Some other banks, such as SunTrust and Atlantic Coast Bank, also have a “Loans To Professionals” category of lending. Kevin Ellis is Atlantic Coast Bank’s vice president and he is also BoeFly’s 2011 “Lender of the Year.”
That means Ellis’ bank is one of the most prolific among over 2,200 other lenders actively searching for commercial loan applicants on BoeFly.com. It is easier and more expedient for them than the traditional way of physically traveling hither and yon to find qualified candidates. “BoeFly’s streamlined platform has proven to be instrumental in helping me source these borrowers quickly and easily, and close some very promising deals,” Ellis says.
When a prospective borrower matches the criteria that BoeFly’s lenders seek, a match is made. Borrowers get multiple offers and choose the one that best suits their needs. The process is seamless and BoeFly experts standby to answer questions and assist loan applicants along the way.
The borrower’s complete loan package and documents needed for a speedy closing are securely transmitted online. Hence the result is a fast and flawless movement from application to disbursement of the loan proceeds. BoeFly is not a broker and does not charge a transaction fee.
I told HomeBanc’s Hanlon how the BoeFly system works. “Thanks for the info on Boefly,” he e-mailed me. “We are looking at signing up with them.” His “Professional Perks” and other small-business programs will be a good fit.
Mike Rozman, BoeFly’s co-president, wrote in Dentistry IQ , “Doctors do not face as many issues as others in securing bank loans.” He noted that, “Health care is more recession-proof, and most doctors typically have real estate or equipment with which to collateralize the loan.”
But equally as important for professionals and well-qualified loan applicants to do, Rozman advises, is to “Cast a wide net,” without accepting the first deal that is offered. One deal is no deal when you do not know what else is available in the marketplace. Getting multiple offers from active lenders is important. “So it’s critical to connect with as many lenders as possible,” Rozman says. Otherwise you may be leaving money on the closing table.
Notably, the finest deal for fledgling companies and medical practices entails more than getting the best interest rate. For example, loans for new companies will usually require collateral and personal guarantees for the full amount of the loan. That is because without several years of progressive cash flow, lenders want an alternative way to pay off the loan. But with a lender’s lien on furnishings, fixtures and equipment, the borrower cannot use the same collateral elsewhere to buy more equipment, or to establish a line of credit.
Some lenders may be willing to release the lien on some or all of the collateral after the business shows sustained cash flow. But there is no assurance that they will, and a verbal agreement is meaningless when your loan officer moves on to another bank. Therefore it is advisable to choose the lender that is willing to insert a collateral-release clause in the loan documents based upon a cash flow achievement benchmark. And with offers from multiple lenders, you have more bargaining power to negotiate the collateral release clause.
Exculpation of personal liability upon leaving the practice is another important clause to negotiate up front. Otherwise, the doctor leaving the partnership will continue to be liable for the loan even though she no longer has control over how the business is run.
BoeFly’s experts are available to move you through the process from uploading your loan application online through closing. But that doesn’t eliminate your need for consultation with an experienced business lawyer to review the closing documents, release of collateral and exculpatory clauses that you negotiate with the lender of your choice.
Jerry Chautin is a former entrepreneur, commercial mortgage banker and business lender. He writes and blogs about business and real estate for several publications and is SBA’s 2006 national “Journalist of the Year.” Jerry is a volunteer business mentor with SCORE, “Mentors to America’s Small Business,” offering free business advice. Post your comments and ask questions on this Blog or send Jerry an e-mail.