SBA Patriot Express Loans – Small Business Loans For Veteran-Owned Businesses – Is Anyone Lending? – Business Loans

You are a veteran or current service member and are bitten by the entrepreneur bug. Truth be known, you have always been an idea person, and mull over in your mind constantly business models and new strategies. You can’t wait to start your own business. Or, you are currently in business and exploding with concepts for expansion. In both instances, you have always dreamed taking on the world by succeeding in your own business. Your biggest problem is: How do you start? Where do I go from here to put into effect those ideas? More significantly, who is going give you the working capital (that’s right, the money) to put those fervent hopes to the test?Well, there is something out there for you. Congress has rightfully acknowledged the service our veterans have conferred upon the nation by providing various benefit programs. We are all aware of benefits under the categories of home loans, education, rehabilitation, and the like, but what if you are the owner of a business? Fortunately there is a program that is devised specifically for our veteran and service-disabled business owners. It comes in the form of reasonable interest business loans administered through the U.S. Small Business Administration (“SBA”) and is called the Patriot Express Loan Program.The SBA since 1953 has been in the business of promoting the interests of small businesses. Traditionally, they were largely neglected by large banks and had to secure their financing by reaching into their own pockets, as well as gingerly extending a hand toward families and friends. So in order to encourage the banks to open up their coffers, they came up with the idea of guaranteeing any default a bank would have after loaning the money. Bear in mind this is not my money coming directly from the Veterans Administration or the U.S. government, but from private banks. The SBA loans direct taxpayer dollars only in cases of the disasters (“FEMA” loans). So then the idea is to give banks the incentive to make a loan because 85% of it is now guaranteed against default with the loss reimbursed from the government. The result: hopefully banks will be more encouraged to make the loan in the first place. This all makes sense from an economic standpoint because as we all know, small businesses grow into large and more productive business models.If you are currently a business owner or planning to take the plunge shortly, paramount in your mind is access to capital. Even the best ideas need the backing of moneys earmarked for development, advertising, inventory, office supplies and equipment, rental of office space, production costs, payroll, and the whole panoply of cash flow needs. This applies across the board to start-up businesses as well as existing ones who wish to expand. But where do you go to receive such funding? It is a dilemma that has been analyzed by Congress and they have come up with a solution.So for years the SBA was licensing the private lenders and monitoring their activities along this line. But what about us veterans? Finally on Flag Day, June 2007, they inaugurated the “Patriot Express Loan Program” which was specifically devised for veteran own businesses. It worked under the same business model so the capital would land in the laps of such deserving business owners. Making it even easier, all existing licensed SBA lenders could get involved in the program with little paperwork. In fact, they used the same basic forms.The loan amounts are between $5,000 and $500,000. The larger loans typically require 100% real estate collateral, more comprehensive financial paperwork, and a cash down payment if you are startup. But for the smaller loans between $5,000 and $25,000, they trimmed down the paperwork and made it especially easy without tax returns, business plans, or financials. As a “lean and mean” application process, it allows the lenders to make decisions within one or two days with funding in ten days by the wiring of the funds directly into a business account.Because they are unsecured loans, the personal credit of the owners is analyzed. The good news is that many lenders allow a favorable review of such credit reports so as to give the maximum benefit to our veterans.Realizing business owners need flexibility in repayment, it was formulated so the loans can be paid off early, stopping all interest, and without a prepayment penalty. Thus, if the owner receives a large draw or payment on a contract, all or part of it can be paid down. And to reduce the monthly payment, it was spread out as a ten year fully amortized, principal and interest loan. Notes that unsecured loans are primarily adjustable rate vehicles, so the interest rate goes up and down based on the Wall Street Journal Prime. But because the payments are spread out over such a long period of time, an increase in the interest rate does not equates to that large of a jump in the monthly payment. This is all good news in our current economy since interest rates have fallen for the last several years.To further simplify matters, there is no longer a need to send in a check with a your payment coupon, since debits are done electronically on the first of the month through a business account.Sounds simple? Well it is, exactly what our veteran-owned businesses deserve. The program is scheduled to be renewed in December of 2010 so in the meantime, it is alive and well as a direct benefit to our veteran businesses, and to jumpstart our economy. Let us not forget that there are 27 million small businesses in this country, and they provide approximately 2/3 of the available jobs.To sum up, here are some of the details of the program:Who May Apply for These Business Loans:o Veterans
o Service-disabled veterans
o Active duty service members
o Reservists and National Guard Members
o Current spouse of a veteran or service member
o The widowed spouse of a service member who died as a result of a service disabilityWhat kinds of businesses? Applies to both start-ups and established businesses, regardless of size, and whether a sole proprietorship, partnership, LLC, or corporation.What kind of credit is needed? This program allows a special concession in the form of a “second look” at your credit report with a liberal and favorable review.How Long Will it be in Place? It was passed into law on June 28, 2007. It is scheduled to be in effect until 2010, when it will be reviewed by Congress. At that point a determination will be made as to whether it will be a permanent program or simply renewed. In other words, it is a pilot program and is not a permanent part of the SBA loan portfolio yet.What can the loan be used for? For most business purposes, including start-up, expansion, equipment, cash flow, payroll, overhead, working capital, or inventory.Lender Incentives to make these Loans. As with most loans through the SBA, the Federal government does not actually loan the money. The lending is done by private banks and finance companies. In order to give these institutions the incentive to make the loans, the SBA guarantees any defaults. For example, for loans up to $150,000.00, there is an SBA guarantee of 85%.TERMSo Loan amounts starting from $5,000
o No coupons or mailing-automatic ACH debit from your business account
o No prepayment penalty or balloon payments-pay off early and stop the interest
o Interest as low as 7.75%BENEFITSo Simplified paperwork
o Quick response time
o Business plans, financials, and tax returns are not required
o No collateral required
o Establishes credit for your business
o Money is wired directly into your business checking account

Unsecured Small Business Loans – Good News – Stimulus Bill Allows SBA 90 Percent Guarantee For Loans – Business Loans

Anyone remotely involved with small businesses, whether as a consultant, lender, supplier, leasing specialist, trade association, or simply as a consumer who is tired of driving by sections of town and wondering why your favorite business unceremoniously threw in the towel, would very much like to hear some good news. Not to mention the small business owner itself. After all, there are 27 million small businesses that deserve to be thriving in this nation, but too often were ignored by the Bush administration. Classically non-complainers by nature, they just want a scrap of hope thrown their way. And I’m not talking about wide-eyed idealists looking for handouts-in all due respect to Emily Dickinson, they’re not looking for the”thing with feathers that perches in the soul”. Just give us a few bucks and we will run with it. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?Fortunately there is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans.Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.If you have tried to wade through the 1,100 or so pages of the new stimulus bill (American Recovery and Reinvestment Act of 2009), you know its like chipping through granite. But let me pull out a little gem. It now allows the U.S. Small Business Administration (SBA to you) to guarantee up to 90% of loans made by private lenders under their program. Let me explain. This is great for Community Express.When the Small Business Act was enacted in 1958, it had a very simple mission. Find a way to get loans to small businesses that couldn’t get them through traditional channels. It did this in an ingenious way. They knew banks where reluctant to loan to small businesses, especially startups, because of fear of failure. So the SBA collected a fee on each loan and used this as a fund to pay banks if there was a default. Bingo, there was invented the SBA guarantee fee. It doesn’t take a degree in rocket science from MIT and an MBA from Harvard to know this gives incentives to the banks to make more loans.SBA loan programs have guarantees from 50% to 85%. Specifically, the SBA currently has an 85% guarantee on loans up to $150,000 and up to 75% on loans above $150,000. On the other hand, there are some programs that only go as high as 50%, including the Express Loan program (for those types of loans the new guarantee will not change). With the new stimulus bill, the SBA has the right to increase these fees to 90%.Think about this for a moment. Simple math tells us more guarantee, the greater the likelihood of the bank making the loan. For goodness sakes, 90% is tapping on the door of a 100% guarantee! Also note the guaranteed portion is typically sold on the secondary market (which has recently shut down to almost nothing) so there is more chance for loans to be sold and more money to go back into the coffers of the banks for further lending.Notice I said the SBA has the right to increase it to 90%. It can pick which program. And it has not occurred yet. But if I was a betting person, I would say they would be seriously looking at most of the programs because everyone is scraping for ideas to revive the economy.For those addicted to primary source documents, this is what the new statute, in relevant part (my attorney wanted me to add that) says:SEC. 502. ECONOMIC STIMULUS LENDING PROGRAM FOR SMALL BUSINESSES. (a) PURPOSE- The purpose of this section is to permit the Small Business Administration to guarantee up to 90 percent of qualifying small business loans made by eligible lenders.
(b) DEFINITIONS- For purposes of this section:
(1) The term ‘Administrator’ means the Administrator of the Small Business Administration.
(2) The term ‘qualifying small business loan’ means any loan to a small business concern pursuant to section 7(a) of the Small Business Act (15 U.S.C. 636) or title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 and following) except for such loans made under section 7(a)(31).There is also a sunset provision under Subparagraph (f) that the guarantees are only good for one year after enactment of the bill, unless extended by Congress.So what does it do for me now as a small business owner? Well now the not so good news. I predict the SBA will be increasing many of its programs to 90%. But to get the banks in the lending mood again, there has to be a secondary market. There is also new legislation on that, which we will discuss in another article. But once we have a secondary market, I predict that they banks will not only loan, but do so in a big way. For three reasons:First, history tells us when there is economic inactivity due primarily to depressed conditions, when the cycle changes for the better, like a sling shot affect, it changes dramatically. Remember when people were unable to refinance or purchase their homes because of tight markets and high interest rates? The rates went down and many jumped at the chance to refinance, improve their homes, and purchase (some say too precipitously) with abundance. Although this is an overstatement and also depends upon other factors such as employment, standards of living, etc., the analogy holds that when things loosen up, there will be a substantial number of business loans.Secondly, banks are in large part in the business of making loans and they have not been doing so for some time. They will be anxious to make profits again.Lastly, simple economics tells us when there is a vacuum in the market; capital will rush in and take advantage of that open market and initial lack of competition. Large banks are not making business loans so small community banks are starting to rush in to take over the arena. Give them a secondary market and they will explode.So for the small business owner, I think this news of 90 % guarantees is favorable. Why did it take them so long?

Basic Facts on Small Business Loans – Business Loans

Basically, you need to a lot of resources to effectively manage your business. Your main purpose may start from a new idea for a business project or even an old product or service with a new method of introduction. Either way, you must realize that a business calls for a lot of requirements and necessities, most especially in the financial aspect.Business loans are widely available which can range from government sponsored loans to private loans designed to assist new businesses. Actually there are many other options but it will depend on your preferences. If you want your interest rate to be low, then opt for loans coming from government grants.If you do not want to venture in this type of loans, you can choose from those that are available in the open market. But these types of loans have a few conditions because these are provided by lenders. Typically, there are two types of loans; the secured and unsecured loans. For the initial process, you are required to come up with a well-drafted business plan or proposal along with your loan application form.A clear, comprehensive and well-drafted plan will usually make it easier for you to obtain your loan. Usually, a concise assessment is done by lenders to scrutinize if your business plan does deserve a loan approval. This will not take too much time because lenders primarily understand your business needs so they try to minimize the time spent in loan processing.In the case of secured loans, these kinds of loans will usually require collateral. They are easily available and are also appealing to a lot of people because of its low interest rate. Government loans are secured loans that are given to the business owner who can prove that the business is beneficial to the whole community. In general, the approval of loan from the government is based on the credibility of the applicant.On the other hand, the unsecured loans do not require collateral and involves a comparatively high interest rate. In choosing between these two types of loans, you should first weigh the advantages and disadvantages of each type before finalizing your decision. In this way, you can be ensured you are making the better deal.Business loans are typically processed in all major banks. Rest assured that you will not have a problem with the banks assisting you with the whole process because these institutions are interested in your business as much as you are interested in your loans. You can also have the option of applying for the loan online; however it is advisable to apply for it in person. This is for the reason that your questions about the loan will be readily answered by a bank representative. In this rate, you will be able to minimize the chances of making a mistake and will enable the bank to determine your exact needs for the loan.So, before you commit to any business venture or pursue your business loan, make sure you have done your advance research to avoid any unwanted circumstances. Once you have prepared enough, your loan transaction will surely be stress-free and a rewarding experience.