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3 Tips for Quickly Acquiring a Longer-Term Loan with Lower Interest Rates

Sherwood Robbins

Truth time: Did you promise yourself you’d at least explore an SBA or similar loan this year? As the clock winds down into the fourth quarter, you may not think there’s time, but you can still slide in before the end of the calendar year. Getting approved can take just 45 to 60 days.

A federal loan in two months? People are always surprised by that quick turnaround, because there’s a perception that acquiring a government loan is really complicated and time-intensive. Indeed, depending on who you’re working with, that can be the case. Here are three tips for speeding up and simplifying the process, so you can meet your goal of acquiring a longer-term loan with lower interest rates by the end of the year.

1. Choose the right “Loan Partner”

A Loan Partner is your guide through the loan process – your liaison between the bankers who will fund your senior loan and the federal, state and local agencies that fund the subordinate loan or guaranty. A good Loan Partner is there for you, supporting your project and moving it toward approval. A really good Loan Partner should explain that they will be critical of your project as well. By digging into your business and understanding the good and the bad, that partner can tell your story fully and accurately. By addressing any issues or concerns, a good Loan Partner is able to show how you, the business owner, are ready to tackle change when (not if) it arises.

Do a Google search, and you’ll see many types of Loan Partners. (It can be overwhelming!). Many of them are “one- trick ponies” that offer a single loan program, instead of a suite of loans that give you a choice, can increase your chances of being approved or give you the options that you seek. In addition, when you choose a Certified Development Company like Seedcopa, you’re getting a locally-based nonprofit that has its finger on the pulse of regional lenders and the business climate. We’re set up to contribute to the economic development of the community. Being responsive stewards that help you quickly navigate the loan process fulfills our core mission.

2. Gather info that tells your story

Whether you choose Seedcopa or another Loan Partner, there is information you’ll be asked to provide to get the ball rolling. Remember that this is a conversation. Seedcopa has a proven plan and customized checklists that walk you through the process, letting you know where you are and where you’re going in the loan process.

  • How much money do you have? Know how much money you are able to put into the project (a.k.a. equity injection). Most lenders require from 10 to 20 percent of the total project. In some cases, like business equipment or expansion, less money may be required.
  • Objects in the mirror are closer than they appear. You might think you know how much the project is going to cost, but your Loan Partner is going to ask for bids/quotes from the professionals who will be doing the work. It’s not good when the project is estimated to cost $200,000, but then comes in at $1,000,000!
  • Is a 200 credit score a bad thing? Know your current credit score. If there are issues, be willing to talk about them. Most lenders can work with a minor credit issue or two, so long as it’s understood why it happened and how it has been corrected.
  • Get personal, and share some history. The personal tax returns and personal financial statement of each owner/principal will be needed. The past two or three years of business tax returns are also required.
  • Open 24/7/365. Be open about your business. If you are a start-up or are growing, you will need to prepare an executive summary, financial projections and the assumptions behind those projections. This will be customized and be as long or short as needed to tell your story. Keep in mind that sometimes, a 300-page business document doesn’t tell the story as well as a 10-page, well-developed executive summary.

3. Feel supported during crunch time.

One of the things I like best about SBA 504 loans is they require you to get your proverbial ducks in a row. When was the last time you updated – or prepared – a business plan, mission statement or company vision? Do you have financial projections? Do you have enough working capital to take on a downturn? Better yet, are you ready to grow sales faster than you’ve ever dreamed? Remember, there is a risk with growing too fast. Planning for the future can separate the success stories from the failures.

The Seedcopa team is ready to talk to you and work with you to prepare all of the above. We know time is of the essence. We prepare our initial assessment and deliver it to you within three business days of receiving the information. The assessment fully outlines the loan, summarizes your financial strengths/concerns and addresses any questions that need to be answered to move to loan approval and closing – the ultimate goal! The best part is that our Initial assessment costs you nothing, but gives you consultation that may cost you thousands elsewhere.

Our final tip is not a tip at all. It’s an expectation you should have when working with Seedcopa, or any other Loan Partner: Prompt communication. This can be the number one obstacle to slowing down the loan process, and if you can’t rely on your Loan Partner to efficiently answer the phone or an e-mail, you’re at a distinct disadvantage. Seedcopa has perfected and streamlined this crucial part of the loan process over the past decade, and would value the opportunity to support you on your next project.

Sherwood Robbins

Sherwood Robbins, Managing Director of Seedcopa + SeedcoDE, has been with the organization since 2007 and is proud to help business owners turn their dreams into reality. Prior to joining Seedcopa + SeedcoDE, he spent more than 14 years in the banking industry, specializing in commercial banking, retail and investment services. For most of that time, he served as a dedicated government loan lender. Sherwood is Region 3 Director for the National Association of Development Companies (NADCO), representing five states and the District of Columbia. He serves as a board member/community representative of Community Lenders, a non-profit community development corporation that finances housing and commercial development projects benefitting low- and moderate-income persons throughout Southeastern PA and surrounding areas. Sherwood testified before Congress in 2017, highlighting the SBA 504 loan program to members of the U.S. House of Representatives.

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