August 4th was Startup Day Across America, when we celebrate entrepreneurs and connect them with elected officials to discuss the challenges that new companies face. Entrepreneurs are crucial to both local and national economic growth. For over 30 years, startups have created an average of 1.5 million jobs per year, and Texas ranks fifth highest on the Kauffman Index of Growth Entrepreneurship.
One challenge facing entrepreneurs is obtaining financing. Startup companies don't have the financial history that lenders require during the loan process. Banks are conservative lenders and may not be willing to take a risk on a new company. The risk for the lender is lessened with a guarantor, and Community Business Finance will help your startup with SBA Guaranteed Loan Programs.
With Community Business Finance's 504 and 7(a) Loan Programs, the government is the guarantor on the loan. Community Business Finance works with a commercial lender to acquire financing and the SBA guarantees 30% - 90% of the loan, depending on the program.
Before you begin any loan process, it is important to have a complete business plan. This business plan should include a description of your business. You should demonstrate knowledge of your industry and identify your target market. This is very important for entrepreneurs, as the lender will approve the loan based on your industry experience and future plans. A business plan should also show your strategies for growth. Cash flow projections will provide the lender with a clear vision of how you will repay the loan.
You also need to describe how you plan to use the loan proceeds. Identify real estate and major equipment purchases you anticipate, and research the cost of these items. If using the proceeds to fund projects, include any revenue that will be generated. Having strong collateral can also persuade a lender to approve a startup business loan. Collateral is an additional form of security that can be used to assure a lender that you have another source of loan repayment. By reviewing your business plan, Community Business Finance can determine the SBA loan that best suits your needs as a startup. The 7(a) loan can be used for working capital, while the 504 loan is used for purchasing real estate or equipment. Both programs offer lower interest rates than commercial loans, with longer repayment terms. Learn more about 7(a) vs. 504 loans.
Community Business Finance also helps you find the right lender to fit your financial need. With access to multiple banks, we have done the research for you. We know which lenders are willing to finance more speculative projects, and which lenders are suitable for stronger projects.
Small business startup loans are risky for lenders, but partnering with Community Business Finance can make an SBA loan possible for your business.
For more information on financing a startup, contact our offices:
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at firstname.lastname@example.org.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017, or email her at email@example.com.