SBA Loans: Do You Need A GPS?

by John King on August 4, 2013

I think we all enjoy helping other people. Think about it. If you have expertise about something and someone asks you for help in understanding that certain something it feels good to be able to help them.

It is human nature. It is how we are wired.

If someone is driving through your neighborhood and they are obviously lost and they ask you for directions. What do you do? You help them because:

a) it is the right thing to do
b) because you’ve been lost before and you know how they feel
…and c) because it feels good.

In fact, most of us go out of our way to help these total strangers.  You might even ask them if they really understood what you told them, because you know from first hand experience what it is like to try and digest the info you receive in this scenario.

First of all, you are a little embarrassed that you are in fact, lost.

Secondly, you are in unfamiliar territory and probably not sure which direction you are even facing at the moment.

Third, you don’t want to seem “slow” as you are mentally taking notes, because duh, nobody writes down directions when they are lost…

and fourth, you are trying really hard to act as if you understand the directions as they are being given to you even though you have that “You know, I actually don’t speak human” look that you get from your dog when you give anything other than a simple command.

Of course, this doesn’t happen much anymore in a world where everyone has a GPS on their phone, but you get the idea.

My Point?

Commercial (and especially SBA) Lending Can Be Confusing

Well, the world of SBA lending can also be a little confusing and borrowers tend to feel a little lost.

They get lost in the terminology - SBA 504 for instance, sounds more like the name of a copy machine than a loan program.

They get lost in the various SBA caveats:  properties need to be 51% owner occupied unless new construction then it is 60%, business acquisitions with INtangible assets greater than $500,000 and less than 25% down/equity have to be underwritten by SBA and not just the lender, etc.

There is also no single lender who will just underwrite using the “SBA underwriting manual” as each and every lender has their own set of underwriting guidelines.

As an example, many lenders will not lend on self storage because they consider it to be investment property regardless of what SBA says.  Some lenders have no minimum credit score as long as there is a good explanation, some require 640 no matter what the circumstances.  Some SBA lenders will approve you for a loan after a bankruptcy or foreclosure depending on how long it has been and what the circumstances were.  Some require large down payments when it might be counter intuitive that one would be required.  Some will finance 100% for certain types of businesses.

Meatloaf and the Banker

On top of all this, you will frequently find a lender who will sound like they are singin’ your tune, but after a week or two or three they break into some Meatloaf karaoke, you know…”I will do anything for a loan, but I won’t do that,” and you find yourself starting over.

So the way I see my job is that I need to provide that candle in the dark - a GPS for the world of SBA (if you will).*

Saving You Time/Money

Time is money and unless you have a rock solid transaction, fighting this battle on your own can be like the Enterprise venturing out into space without Scotty or Spock.  (i.e. there’s a good chance you get sucked into a black hole).

Can you do it on your own?  Sure.  Would you find the right deal?  Maybe.  Would it be worth it?  Possibly, but what is the cost? How much of your valuable time is it going to take to find the right deal and get it closed?

Can I get you a good deal?  Yes.  Can I get you a great deal?  Very possibly.  Can I guarantee you the best deal?  Nope, nobody can. And there are always better deals.

Have you ever paid the lowest price on the planet for anything?  I haven’t.

Someone is always going to find a better deal than you on every purchase - be it a car, a home, a building or even a bottle of wine, so the question you have to ask yourself is: “do I let someone help me or do I go it alone?

Both ways can work, but if you feel like you need some assistance then I can probably help you navigate your way through the process and to the right lender.  Contact me at jking (at) green commercial capital (dot) com or 1-800-414-5285.

Click here to find out how it may not cost you a penny.

*Disclosure: Unlike a real GPS, I don’t actually use low earth orbit satellites to triangulate the location of a good lender.

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