| When applying for an unsecured SBA small business | | | | business in order to expand and increase income. We |
| loan, there are certain things bankers like to see. For | | | | are at a position where one of our competitors and |
| example, for the Community Express loans, the | | | | has closed shop and we can reap the benefits of this |
| paperwork is quite abbreviated and you are only | | | | situation. We know we will have been increased |
| asked what kind of business, length of time in business, | | | | income to easily pay-off the debt service of the loan." |
| industry experience, credit, and gross income. But what | | | | 2. "We have reached capacity in our dining room and |
| other factors will they consider? | | | | plan to add on to some available kitchen space. This |
| To answer this, you have to delve into the mind of a | | | | will allow us to increase the menu and volume for our |
| banker. One of their fears is that the money will "go | | | | lunch and dinner trade." |
| down a whole", be gone, and not be used to | | | | 3. "In our printing business, we would like to buy two |
| productive use. As a result, there will not be enough | | | | more industrial color copiers to go in each of our retail |
| increased income to support the loan payments. There | | | | stores. This will enable us to capture more of the |
| even fears from some bankers that the money will be | | | | market so that our customers do not turn their |
| used for personal purposes. | | | | business to some of the competitors in town." |
| Some lenders go so far as to require the loan be used | | | | Good examples |
| for tangible property, such as actual inventory, | | | | 4. "We will be expanding the capacity of our |
| equipment, machinery, tools, raw materials, advertising, | | | | restaurant. In researching the availability of the |
| and the like. Others have a broader definition of | | | | equipment, we went to six commercial supply houses |
| entitlement, and will allow it for customary cash flow | | | | and chose Acme Restaurant Supply with |
| needs, such as rent, utilities, payroll, insurance, and | | | | reconditioned items covering a one year warranty, as |
| supplies. | | | | follows: |
| But for all bankers, it is an absolute "turn-on" for them | | | | A. Wolf reconditioned oven model 602 at $2,555. |
| to have an itemization of exactly what it is going to be | | | | B. Acme walk-in cooler, 6ft. by 20ft., with a ten HP |
| used for, in general and not specific language. So most | | | | cooling unit, at the reconditioned price of $5,323. |
| successful applications I have seen have had a | | | | C. Portable Acme cooler model X850e for they |
| specific itemization of the material or equipment to be | | | | reconditioned price of $650. |
| used, listed as a schedule, including make, model, and | | | | D. Etc. |
| pricing. It shows that you have done the requisite | | | | In doing so, it is a good idea to have attached inventory |
| research and gives a measure of confidence to | | | | list with pricing. Even better, would be an actual written |
| lender. | | | | quote from the supplier. In doing so, the banker can |
| Poor Examples | | | | readily figure out that this will result in increased income |
| 1. "To be used for basic cash flow needs of the | | | | and a better chance of repaying the loan. |
