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Archive: The Worst and the Best S.B.A. List for 2015

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Getting a SBA loan for your Austin business

(from the Monthly Newsletter January 2015)

S.B.A does not lend money. Instead, it's an insurance agency that protects the bank. There's usually a upfront guarantee fee that gets built into the loan. There is no technical limit on the amount of intangible assets (GOODWILL) that can be financed. However, if the amount exceeds $500,000, the borrower, with perhaps the assistance of the seller, must provide an equity injection of at least 25% of the purchase price.

Here is a list of '10 most friendly' and '10 least friendly' businesses as far as S.B.A loans go:

MOST FRIENDLY (5 stars):

1.Self Storage Facilities.
2.Veterinarians/ Doctors.
3.Medical Related (except Chiropractors).
4.Distribution Centers with Real Estate.
5.Hardware Stores with Real Estate.
6.Recycling facilities with Real Estate.
7.In-home Therapy centers.
8.Funeral Homes
9.Farms for expanding and equipment.
10.Factories/Manufacturing with Real Estate or good sales trend.

LEAST FRIENDLY (0 stars):

1.Used Car dealerships.
2.Travel Agencies.
3.Vending Routes.
4.Tanning Salons/Skin & Massage/Nail Salons/Hair Salons.
5.New Franchises.
6.Limo/Taxi businesses.
7.Gift Shops
8.Convenience Stores.
9.Collection Agencies.
10.Telemarketing/Telephone Sales.

Not all businesses/buyers qualify for S.B.A. loans. Some of the biggest deal killers are:

1.Applicant and spouse Credit Score under 680.
2.Record of a Short Sale/Fore-closure/Bankruptcy.
3.Insufficient Collateral backup.
4.Shaky 'Management Resume" or long breaks in employment.
5.No understanding of the S.B.A Guaranty fee.

How does this relate to you when it comes time to sell? Being on the 'least friendly' list is not necessarily bad, but when you are approached by a potential Buyer of your business whose only means of financing the acquisition is a S.B.A. loan, you know it's wishful thinking and a waste of your time. On the other hand, if you are on the 'most friendly' list, it's viable that the Buyer can get a S.B.A loan to buy your business, provided he/she is otherwise qualified and your book-keeping and Tax returns are clean.

Is your business category not on either of the lists? Subscribe to our Newsletter for Business Owners and get your score emailed to you.