SBA Small Business Loans – A Huge Benefit to Start-Up Businesses

Setting up a new business is never easy. There are innumerable details that need to be taken care of. Start-up businesses are mainly dependent on loans for almost all their business requirements. It is therefore extremely important to find an appropriate and reliable lending source to cater to their financial needs. However, since most conventional lenders and banks are not keen on providing loans to new business owners due to various security reasons, opting for SBA small business loans can be an excellent idea.

Small businesses can contribute immensely in developing and enhancing the nation’s economy. The Small Business Administration (SBA), which is a United States government agency that provides loans to small businesses with the aim of improving the country’s financial condition. These loans are meant to support the establishment of small businesses by providing through adequate financial assistance. These loans cannot be obtained directly from SBA, but through a number of their lending partners working in accordance with the SBA rules and regulations.

The SBA offers a wide variety of loans that demand different qualifications of the borrowers. The various financial programs offered by SBA such as surety bonds, debt financing and equity financing are designed to cater to the different financial requirements of borrowers. In order to avail a loan from them, it is extremely important to understand how the SBA works. Let us discuss some basic rules and regulations of the SBA:

  • The SBA loans are provided to business owners at a lower interest rate than banks and other conventional lending sources owing to the fact that start-up business owners do not have adequate capital to opt for loans with high interest rates.
  • SBA does not provide loans to small business owners directly. Instead, they merely set certain rules and regulations that are strictly followed by their partners, including private-sector lenders, micro-lending institutions and community development organizations, who are authorized by the SBA to provide loans to start-up businesses.
  • The loans are provided to the business owners under an SBA guarantee to ensure that the loan is repaid on time to the lending partners. Business owners cannot avail SBA small business loans in case they have the eligibility to obtain loans from other lending sources on affordable and reasonable terms.
  • You can obtain SBA loans fast and without any kind of hassles. They can be acquired on an immediate basis as soon as they are applied for. This can be immensely beneficial for start-up businesses that need financial assistance for all their business needs. Delay in acquiring loans can create problems for them in setting up the business.
  • One of the most beneficial aspects of SBA loans is that they can be availed even if you have a poor credit record including bankruptcy, insolvency, IVA etc. It can be an excellent way to improve your credit records.
  • SBA offers various kinds of loans, including 504 for purchasing real estate and equipment, 7 (a) for common small business loans, disaster loans and microloans. Not all banks issuing SBA loans offer the same loan programs. Moreover, in accordance with individual bank policies, the loan requirements for a particular program can differ from bank to bank.

The SBA rules and regulations for small business loans are designed to help start-up business owners and can be extremely beneficial for them.

Commercial Broker Fee Agreement – Exclusive Or Non Exclusive?

Commercial mortgage brokers are constantly asking themselves if they should ask their clients for an exclusive relationship or go the “easier route” and secure a non exclusive fee agreement. What’s the difference? What’s the pros and con’s of both? That’s the point of this brief article.

An exclusive relationship within the commercial mortgage field can be thought of as a listing agreement within the real estate brokerage side of the business. Or more specifically the exclusive agreement should be thought of as a tenant representation agreement for those that are familiar with that agreement.

Essentially the exclusive agreement states that the borrower agrees to work with the mortgage broker on an exclusive basis with shopping for lenders, negotiating term sheets and coordinating the processing and closing of the loan (among other legal issues I’m not qualified to discuss). The commercial mortgage broker is handling the whole transaction on behalf of the borrower and typically is looking out for the borrower interests. A non exclusive agreement still covers a lot of the same issues but gives the borrower the right to work with other lenders/ brokers. So there’s no guarantee that you’ll win the deal and or get paid.

The main advantage for the commercial mortgage broker to get an exclusive is that the borrower has committed to working with the broker, and at the end of the deal the broker will get paid. For those reading this article that have worked on deals for months with borrowers and to find out they lost it because of 10 basis points or slightly lower fees know how bad this can sting.

Most exclusive fee agreements cover a lot more than the exclusivity issue; retainers, expenses covered, minimum fees are some of the more important issues. For example having a borrower send you a thousand dollar retainer and a signed exclusive agreement says a lot; that he’s on board and going to work with you.

There are disadvantages though of going for an exclusive agreement. The obvious is that many borrowers simply will not want to sign off on this. It can be a hard sell. They’ll want you to “get them quotes” or “see what you can offer” first. Basically the borrower will want to keep total control and will only want to work with you if you can produce the best deal. So you stand to lose working on the deal if they don’t agree. You may know that perfect bank for the deal and or just want to work on it with the hopes of building a solid relationship along the way.

Also, YOU may not want to work on the deal on an exclusive basis. Believe me when I tell you that if your borrower agrees to a 5 page agreement and sends you a $1000 retainer, that they will want to get their money’s worth and are not going away. If they deal is weak and you find you can’t get it done, you’ll have to invest a lot more time into the deal than wanted and or break off the relationship and risk tarnishing your reputation.

So, unfortunately there’s no simple answer if you should go for an exclusive commercial mortgage broker fee agreement or not. But you should get you borrower to sign something that says you’re working with him and that you’ll get paid at close.

Starting a Small Business: Dreaming

There are many phases to starting your own small business. Lots of steps to go through to get from that initial idea to a fully functioning business. My husband and I are just beginning this journey, and as we do so, I want to walk you through the steps we are taking based on the advice and insight we’ve received from successful entrepreneurs and my years of business marketing experience.

Phase one is at once simple. Almost like taking a breath it can come unexpectedly and give you everything you need to dive into the depths of a new adventure. It is simultaneously complex. Just like breathing, if you stop to think about it too much, you may just freeze up and forget how to get started.

Jon Acuff talks about a rule he and his wife have. He is allowed to talk through his dreams and she just listens. No questions of how or the cost from her planning brain, and no spontaneous purchases from him during this “Wow” time. When I first heard this concept, I knew it was perfect. For every dreamer out there, they probably have a close relationship with a planner. Spouse, friend, business partner, whoever that person is for you, this safe atmosphere to dream is a must.

As you start dreaming about your small business idea, find someone you can safely dream with, maybe several people even. Jot down your ideas or have your phone take a voice memo. Just keep thinking of things you enjoy, things you are passionate about, things you think will make a difference or that need changed.

Truth be told, you may not even realize you have a small business idea during the dreaming phase. You may just be dissatisfied with your job or you may have a frustration that you see a solution to that no one has thought of. While the first phase of starting a small business is dreaming, often this phase will be over before you realize you do want to start a small business.

But even if you have already begun your business or if you a veteran business owner, you should always be dreaming. It is in the creativity of imagination that we continue to grow and find new avenues for enjoyment and even profit.

The dreaming phase may be the beginning, but it should also flow throughout the life of your small business. In our family, my husband is the dreamer. He has tossed out a lot of ideas brainstorming about his goals. He has finally settled on one that is a great starting point, meets a real need, and has a low starting overhead. This dream is one that we can both latch onto, and in the coming months, I will share our journey in launching our very own small business.

Marketing Ideas Small Business Owners Can Use to Get More Referrals

Many professionals and small business owners want more referrals. They know referrals are a big part of their marketing strategy.   However, many people are reluctant to ask for referrals. It makes them feel needy, greedy or pushy.  But it doesn’t have to be that way!

What is the number one question people ask you?  It doesn’t matter what you do for a living.  The question is always the same.  Ready?  It is:  “How are you?” 
 
If you are like just about everyone, your answer is always the same: “Fine.”  That is a dead-end street.  Next time, use that as an opportunity to talk about your business. 

 
Try something like: 
 
“I’m great.  I’m working with a new client who (describe your client).  I’m helping him by (fill in what you are doing to help that client).  I really like working with people like that because (say why).”
 
Now here’s the important part. Ask for a referral.
 
“Do you know anyone who (describe your client again)?  If you do, let me know.  I’d love to help them, too.”
 
Need an example?   
 
Here’s something an accountant might say.
 
“I am great.  I am working with a client who wants to retire and sell her business in a few years.  I’m helping her get her finances order now, so she’ll be in good shape when she is ready to sell.  I like this type of project because I know with my help, she’s going to get a lot more money when she does sell her business.  Do you know any business owners who are nearing retirement age?  If you do, send them my way.  I’ll be happy to review their books and see if there are areas that need updating.”
 
Need another example? Here is something a restaurant owner could say.
 
“I am great! I just introduced a new menu. It has some heart-healthy entrees on it and my customers love it! I like providing food that tastes fabulous and is good for my customers, too. It makes me feel like I am really taking care of them. Do you know anyone who is interested in improving their eating habits? If you do, send them my way. Be sure they tell me they know you. I will be happy to give them extra-special treatment.”

 
With a little modification, you can also use this type of message in written communication (seasonal cards, e-mails, etc.) to your contacts. 
 
Give it a try!  You’ll soon find getting more referrals is a lot easier than you thought.