The most frequently asked question I receive by far is how long does the loan application process take to complete from start to finish. The quick answer is 45 - 60 days. The honest answer is it takes as long as necessary to complete all steps in the process. The next logical question is what are the steps. Here is a list of each step in order with an explanation. Before I begin, I want to emphasize the timeline starts from the day the lender receives the monetary Deposit, usually $2,500 or $5,0...
Jan 13, 2021•6 min•Ep. 39
Applying for a small business loan can be stressful, grueling and confusing when you hear the dreaded NO from your bank. Does this sound familiar? Hello, my name is Ryan Smith, Principal Broker and Founder of ThinkSBA. If you are listening to this podcast it’s likely you are a small business owner or entrepreneur who is purchasing real estate, acquiring a business or franchise or are in need of working capital to grow or start your business. If this describes you, you’re in the right place. I st...
Dec 03, 2020•2 min
Seller Discretionary Earnings referred to as SDE equals net profit, which is the sum of annual revenue minus expenses, plus add-backs of seller discretionary spending. SDE directly impacts enterprise value, buyers equity injection, loan amount, seller carry amount, and debt service coverage ratio which ultimately determines whether a loan application is approved or declined. Common expenses added back by sellers beyond Interest, Tax, Depreciation and Amortization include officer salary and benef...
Nov 23, 2020•6 min•Ep. 38
The most important step in the SBA loan application process is closing the loan. This is obvious, right? You would think so. However, many applicants make the mistake of focusing their attention on closing after it’s too late, and they've missed a critical step or piece of information that inevitably prevents them from closing the loan. An SBA loan is considered closed after a loan number has been assigned by the bank and boarded to their loan management platform, applicant and bank funds have b...
Nov 05, 2020•5 min•Ep. 37
Navigating the SBA loan program and application process can be complicated. For starters, the entire SBA loan program, including borrower eligibility requirements and all policies and procedures, is governed by the SBA’s Standard Operating Procedures Manual also known as the SOP for short. The SOP is a 400 page document filled with industry jargon and references. To make matters worse, it is regularly updated making it nearly impossible for an applicant to know everything necessary to successful...
Oct 21, 2020•5 min•Ep. 36
Are you a business owner or entrepreneur applying for an SBA loan or planning to in the near future? If your answer is yes, then keep listening because this podcast was recorded specifically for you. In this podcast I reveal the science of obtaining SBA loan approval. That’s right, being approved for an SBA loan is a science and is based on the following five fundamentals. The first fundamental is Experience, the second Liquidity, the third Personal Credit History, the fourth Cash Flow and the f...
Oct 08, 2020•7 min•Ep. 35
Business succession planning is vital to the longevity of any business. This is especially true when a business is owned by two or more individuals, for seldom do business partners share the same retirement and life goals. Therefore, a business is most likely to experience an interruption or even worse, the ceasing of operations altogether, when one partner is ready to exit the business and the others are not. This matter is further complicated when the partnership also owns both the business an...
Sep 19, 2020•5 min•Ep. 34
Business owners purchasing or refinancing commercial real estate financed by an SBA 504 or 7a loan are required to hire a certified commercial appraiser to prepare a commercial real estate appraisal report which includes the “as is” value of the subject property on the day the report is delivered to the lender. Every loan applicant needs to know the following regarding the commercial appraisal report. The cost is generally between $2,500 - $4,500 The lender’s appraisal department orders appraisa...
Aug 18, 2020•5 min•Ep. 33
The World of SBA Lending - 0:46 SBA Lenders are actively approving and closing loans. Everyone's pipelines are flush with loan originations. Underwriting is taking up to three weeks with the loan package sitting in the queue for nearly two of those three weeks. 25 year fixed Interest rates are as low as 2.9% for SBA 7(a) real estate purchases and refinances for qualified applicants. Real estate and working capital projection based loans are still being funded if 100% collateralized by real estat...
Aug 08, 2020•15 min•Ep. 32
The Landlord Lien Subordination And Collateral Access Agreement is required to be executed during the loan closing process when an applicant receiving an SBA loan has secured an interest in real property through a commercial lease. Parties to the agreement include the SBA Lender, who is referred to as the Lender, the SBA loan applicant, who is referred to as the Tenant and the Landlord who owns the premises occupied by the Tenant, who is referred to as the Landlord. The purpose of this agreement...
Aug 07, 2020•5 min•Ep. 31
Contrary to popular opinion SBA Loans are quite flexible. Case in point, The SBA Standby Creditor’s Agreement. This Agreement establishes the interest rate and loan terms of a promissory note between the buyer, referred to as the Standby Borrower and the Seller, referred to as the Standby Creditor, to mitigate three fundamental credit weaknesses in the loan application. If you liked this content, let's connect on social media: Instagram: https://instagram.com/mysbapro Twitter: https://twi...
Jul 23, 2020•6 min•Ep. 30
There are many instances where borrowers applying for an SBA loan to purchase real estate, acquire a business or franchise or obtain working capital for growth do not possess the required 10% minimum equity injection. The good news is that the SBA permits the applicant to receive a monetary gift to assist with the equity injection. This gift may be given by any willing participant. If you liked this content, let's connect on social media: Instagram: https://instagram.com/mysbapro Twitter: ...
Jul 23, 2020•4 min•Ep. 29
November 1st, 2018 the SBA combined SBA Form 159(7a) and SBA Form 159(504) into one form known simply as Form 159. Form 159 requires applicants to disclose services and fees charged by an Agent hired in connection with applying for an SBA loan whether a 7(a) or 504. The purpose of this form is threefold. To reduce fees paid by applicants in connection with applying for an SBA loan To protect applicants from predatory Agents who charge unreasonable fees To promote transparency and integrity betwe...
Jul 07, 2020•5 min•Ep. 28
Form 2202 must be completed on behalf of the subject business requesting the loan and all affiliate businesses. Affiliate businesses are defined by the SBA as any business owned 51% or more by a 20% or more owner of the subject business. Form 2202 documents the subject business and affiliate businesses monthly debt obligations which is essential to determining the debt service coverage ratio or dscr for short and debt to tangible net worth ratio also known as leverage. Both The dscr and debt to ...
Jun 30, 2020•5 min•Ep. 27
Hello and welcome to the State of SBA Lending Address presented by yours truly, Ryan Smith, Principal and Founder of ThinkSBA. I help business owners and entrepreneurs find the right loan to purchase real estate, acquire a business or franchise or obtain working capital to grow or start their business. State of SBA Lending Address Topics Recent updates to PPP Three types of lenders Qualifying for financing today! Current rates for SBA 7a real estate and non-real estate loans Current rates for SB...
Jun 23, 2020•11 min•Ep. 26
The SBA Statement of Personal History Form 912 must be completed by everyone who answers yes to questions 18 or 19 on SBA 7(a) Borrower Information Form 1919, Section II: Principal Information. These questions ask whether the individual principal applying has been arrested within the last six months or whether they have EVER, I want to stress EVER, been convicted, pleaded guilty, pleaded nolo contendere, been placed on pretrial diversion or been placed on any form of parole or probation for any ...
Jun 17, 2020•4 min•Ep. 25
The SBA 7(a) Borrower Information Form 1919 is required to be completed by every individual with 20% or more ownership in the applicant business entity whether applying for an SBA 7a or 504 loan. Completing this form is not complicated but there are a few things that are important to know. First, the form consists of 26 questions spanning two sections, The first section pertains to the Applicant business and the second section to it’s individual principals or owners. Before answering the questio...
Jun 09, 2020•5 min•Ep. 24
The Personal Financial Statement, often referred to as a PFS for short, is one of the most important documents to the loan application. The PFS must be completed by all individuals who own 20% or more of the borrowing entity and is to include all personal assets, liabilities, annual income and debt obligations. I want to stress personal financial information, not business. I will address what is necessary to properly document Business financial information in future episodes. The PFS requires th...
Jun 01, 2020•4 min•Ep. 23
One of the most popular ways to become a business owner is to acquire an existing business. And the easiest way to qualify for financing is through the SBA 7a program. Before I highlight the advantages of the 7a program, I’d first like to raise the point that acquiring an existing business is not always the best route to becoming a business owner. In some cases it makes better financial sense to start a new business rather than acquiring an existing one. Here’s the test I like to apply. If you’r...
May 20, 2020•6 min•Ep. 22
In this episode I will answer the 10 most frequently asked questions I have received from business owners regarding the Paycheck Protection Program. Can I use loan proceeds to hire new staff? The answer is no, you must maintain current employment levels or re-hire employees laid off or furloughed and use 75% of loan proceeds on payroll. Can I use loan proceeds to pay my primary residence loan payment if I am a home based business? The answer is no, loan proceeds are to be used to pay commercial ...
May 11, 2020•4 min•Ep. 21
Often business owners will want to acquire raw land and build or improve an existing commercial building to suit their unique business model and company culture. The SBA 504 and 7a Loan Programs are designed perfectly to meet this purpose. If you are currently contemplating whether to buy raw land to build or improve an existing building you’ll want to pay close attention to the rest of this podcast. First, as the project sponsor you’ll need to identify the acquisition cost of either the raw lan...
Dec 08, 2019•4 min•Ep. 20
How To Build Wealth Through The SBA 504 Loan Program The SBA 504 Loan Program is a Federal Government Guarantee program designed to incentivize business owners to purchase commercial real estate to occupy their business. Be sure to browse other episodes in the SBA FM podcast library for more in depth knowledge of the SBA 504 loan program. A few notable highlights of the SBA 504 loan program include the following: Only a 10% cash down payment, low interest rates fixed up to 25 years, a favorable ...
Dec 02, 2019•3 min•Ep. 18
Many small business owners are unfamiliar with pre-payment penalties associated with purchasing or refinancing commercial real estate through the SBA 504 or 7a guaranteed loan programs. So let me educate you on what they are and how you can avoid the pre-payment penalty trap. A pre-payment penalty is a fee charged by a lender to the borrower for making incremental payments to the remaining principal balance in addition to the required monthly payment or paying the loan off in full prior to matur...
Dec 02, 2019•3 min•Ep. 19
The answer is no, not all SBA lenders are created equal. That’s because each lender applies the Small Business Administration’s Standard Operating Procedures manual, also referred to as the SOP, differently. For example, some lenders have developed internal lending policies that are more stringent than the SOP. These lenders favor prime borrowers which translates to the lowest rates and most favorable terms for the few businesses who qualify. If you liked this content, let's connect on social me...
Sep 16, 2019•3 min•Ep. 17
An SBA non-bank lender is a financial institution that does not accept customer deposits. Their sole reason for existing is to lend money to eligible small businesses in their community. On the other hand, a bank is a financial institution that solicits monetary deposits from their customers and in turn loans these funds to other customers such as individuals and businesses seeking capital for a variety of reasons including starting or expanding a business. If you liked this content, let's conne...
Aug 18, 2019•3 min•Ep. 16
As its name implies, a multi-purpose property is commercial real estate comprised of improved land with a building that has multiple purposes or uses as opposed to buildings that have a single-purpose o use. The primary determining factor whether a property is considered multi-purpose has to do with the design of the building and not the activity of the occupant. If you liked this content, let's connect on social media: Instagram: https://instagram.com/mysbapro Twitter: https://twitter.co...
Aug 12, 2019•3 min•Ep. 15
As its name implies, a single-purpose property is commercial real estate comprised of improved land with a building that has a single purpose or use as opposed to a building that has a multi-purpose or use. The primary determining factor whether a property is considered single-purpose has to do with the design of the building and not the activity of the occupant though these often do coincide. If you liked this content, let's connect on social media: Instagram: https://instagram.com/mysbapro ...
Aug 11, 2019•3 min•Ep. 14
Do I Need To Personally Guarantee An SBA Guaranteed Loan? The answer is yes, let me explain. It’s important to understand that the applicant or borrower is the business, not the individual owners of the business. Therefore, the business is primarily responsible to pay back the loan which is why this repayment source is referred to as the primary source of repayment. The secondary source of repayment is often in the form of assets owned by the principal owners of the business which is defined as ...
Jul 29, 2019•3 min•Ep. 13
Not every individual obtaining an SBA guaranteed loan is required to pledge their personal residence or any other real estate owned as collateral. However, banks, credit unions and non-bank lenders are required by the SBA’s Standard Operating Procedure manual to take the applicants personal residence or other real estate owned as additional collateral on non-real estate loans where there is a shortage of collateral. If you liked this content, let's connect on social media: Instagram: https://i...
Jul 20, 2019•3 min•Ep. 12
The SBA 504 guaranteed loan program to purchase commercial real estate is comprised of two loans. One provided by an SBA Preferred Lending Partner and another by an SBA Community Development Corporation (CDC). SBA Guaranteed 504 real estate loan rates on the second portion also referred to as the Debenture are fixed based on the 5 year and 10 year treasury index rate plus a predetermined fixed rate and an additional percentage rate to capture ongoing annual fees. If you liked this content, let's...
Jul 18, 2019•3 min•Ep. 11
