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    3 Replies Latest reply on Mar 18, 2009 12:36 PM by wilfin

    Q's regarding SBA's and Small Biz Loans... Confused

    importbiz Newbie
      Hi all - I'm a small business owner, looking for some advice/direction in regards to business loans. I've been trying, to no avail, to apply for a business loan. To summarize - My business banker did the standard practice of discounting business assets (inventory, A/R, equipment) to determine a suitable size loan. That amount came out to $150-200k depending on what discount percentage. This loan will be used to acquire extra inventory for the upcoming season - I've already put together all the equipment, infrastructure, and manpower.

      The loan was submitted to corporate, and corporate came back with a $25k approval, which I turned down. My branch manager then referred my loan to their SBA department, and they approved for $70k, which I also turned down. Two reasons for not giving me the requested amount: Insufficient personal assets, and industry (automotive), even though I show strong profits year after year. They basically said that I needed some real estate, even though I offered cash as a secured deposit.

      I've spoke with other community banks, and they all gave me a somewhat manipulative answer: Transfer your business checking over first. So I'm a bit confused now... Do I not meet the requirements? Is it because I own no real estate?? I mean, I can convert my cash into equity in a real estate, but do I really want to do that? Any advice would be appreciated :)

      Stats: Annual sales $2-3M, Fico 700+, 5 years in business.

      On a side note, I turned around, and applied for 3 business credit cards and was immediately approved for a total of $50k, without submitting 100+ pages of financials.
        • Re: Q's regarding SBA's and Small Biz Loans... Confused
          bmt2008 Adventurer
          Banking standards have really changed over the last year. Even though a local loan officer is follow their policy - there is still a loan committee that most loans go through. The loan committee has more information on the state of the bank and can at any time modify their policy.

          Banks hurt themselves by running after the subprime markets over the last 5 years or so. It was fast and easy money. They went too far on the high side. Now that they got their hands slapped, they are going too far on the low side.

          Don't blame yourself - it is them and not you. I know it is not fair - but it is a reality. I hear stories everyday of companies that have had LOCs with banks for years (I am talking 10 + years) never been late on a payment - never abused the Line - then the banks - without telling them - just cut or closed the line.

          You have a right to be confused - and there is no real answer for you - I just hope it does not hold you back from moving forward.

          As a side note, there are unsecured lenders that provide businesses like yours up to $250k. Need good credit and good income. These are unsecured - thus no real estate required - no asset valuations - no nothing - just good credit and good income.
          • Re: Q's regarding SBA's and Small Biz Loans... Confused
            mlebovits Newbie
            There is a little known (and little offered) SBA loan program called CAPLINE which provides a revolving line of credit tied to accounts receivable and inventory. While it has the same documentation requirements as a standard SBA loan, it doesn't require real estate collateral.

            Marshall Lebovits
            • Re: Q's regarding SBA's and Small Biz Loans... Confused
              wilfin Adventurer

              Please refer to my profile and contact me. I'd like to discuss this further as we may be able to help you.