Youtube link to this video https://youtu.be/gdFVUeaRjMY
Transcript of the Video
Hi, my name is Dan Pace, I’m the Chief Financial Officer of First Financial Leasing and Finance.
We were established in 1997 for the purpose of facilitating small business owners
to open a startup business or facilitate their existing business.
We primarily loan SBA packages anywhere in the amounts of $20,000 up to $5 Million.
Once again, we are geared more towards small business, we are considered an industrial lender, we work with over 15 different banks across the United States.
Anywhere from an FDIC to an industrial bank to a non closure lender.
Our success ratio has been extremely high for the industry. Currently, just in the year 2015 we are at 98% approval.
It’s a wonderful thing we do, we understand how to package loans for people. We talk to them, we find out what their needs and wants are. What do they want the money for? How do they want to use it? What’s the term they are looking for to pay it off in
how is the business setup? Then we package the loan, we take all the essential information that’s needed and we put it together and we submit and underwrite so we know ahead of time if you can be approved.
It’s a wonder thing, I would like everyone to look through the next series of probably 7 to 10 videos that we are going to do with all the types of programs today my job is to basically explain what First Financial does and to go into the myths of SBA financing and the most frequently asked questions where people get confused what the SBA is.
It’s not a difficult process for people, it’s actually a very simple process. There is a lot of paperwork, there is no doubt about it, but for a startup or existing business to go out and borrow money at very low rates, over a 10 year period of time, we’re just talking about working capital or equipment, is astounding.
It’s the best way to positive cash flow your business and to create a win win for you and the bank in the future to borrow more and more money and build and establish your business.
With that being said, I’m only going to take a few minutes
I know everyone get a little bored when they watch things, so I’m going to go in and explain
a few thing to you, the first is
Question one, that I get most frequently is.. When is the SBA going to fund my loan?
First of all, the Small Business Administration is not loaning the money to you
as a client. The SBA is our government which guarantees the loan to the lending institution
There are a variety of different kinds as I’ve states a few seconds ago
and they run anywhere from an FDIC insured bank to an industrial bank, to a specific lender who is approved
to loan money under the SBA guidelines
it’s very stringent to be able to get setup and do that
but the fallacy is, I take a hundred calls a month
where people think the government is loaning the money
the government is not, all they are doing is backing your loan
and they give banks certain dollar amounts on certain types of loans
and that could be anywhere from an Express Loan, and SLA2 loan, to a 7A to a 504.
Those loans vary, express loans you’ll learn in our upcoming videos are very small
$25,000 to $150,000
our SLA2 programs run from $151,000 to half a million dollars
our 7A’s run from $501,000 up to 5 Million dollars
and our 504’s, which are primarily for construction, run up from the balance to 10 Million dollars.
now, with that being said, everyone still has the same questions
I’m going to use a little bit of paperwork here and put my glasses on so it’s easier for me to see…
the next question is, Where can I get an SBA loan?
it’s the simplest one of all, but it’s not in the long run
because here’s what happens
the individual person, being is business or not, they will have a mortgage, they have a car payment
at a traditional bank or any bank
they want to open a business, it’s a startup
for example, or it could be an existing business
they go to their local bank because that’s where they have their deposits
that’s where the money’s at and the bank turns them down
and they think there’s no way to possibly get another dime
for whatever they want to do, it’s not necessarily true
it’s only because of where you are talking to the people, the people you go into see
do not understand, there are loan officers who do mortgages for people
they do no know how to open a startup business, they don’t know anything about it
they don’t know anything about existing businesses other than the fact that you may have your checking account there
or your credit cards there and banks survive on what’s called retail business
and that is specifically retail business
so, there are many institutions out there, to community banks, to lending banks, to all these different sources
that provide money to businesses that aren’t really known to the business or startup person
without someone, for example like First Financial, because we have all those the sources to look at all the different needs to fit you into the box
The features of an SBA loan. Where people make a fallacy of it is most of the time their questions are
What does the SBA do? How does?it actually work.
It’s very simplistic, the government backs the loan, the bank approves the loan
depending of what type it may be, it could be an Express Loan where there’s really no collateral needed
and that’s up to $150,000.
as soon as you start going over the $150,000 mark there is collateral.
by collateral, what I mean we are going to look at real property, we are going to look at your home, we are going to look at any real estate
you may have, we do not want stocks, we do not want your bonds, we don’t want your first born children believe it or not
we want the basic stuff to collateralize the loan that makes sense
under SBA guidelines, you must take it if it’s available
so that’s where the collateral and eligibility parts come in
we look for credit, people ask me what does my credit have to be?
there is no set credit score number
if we were to justify something, I would say Experian is 680, but it doesn’t necessarily mean that’s what it is
there are stories and solutions to everything when you look at these loans
it’s really a factor of what type of business
the next thing that comes into play… is SBA eligible for every type of business?
the answer to that is absolutely not
there are restricted industries
I’m not going to get into the list
we can eventually give you a list if you like, but there are certain industries they just won’t back
or do and we will eventually go through that in later parts of this video series
how long does it take to fund it, how long does it take to get approved
a traditional SBA loan, anything from express up to a 504
once we have collected all the paperwork that is needed and the financial information
normally it can take anywhere from 2-14 business days to be approved
to physically have a hard copy in your hands
from that point you decide if you want to move forward
if you do, you sign off on the document
,forward it over to us, we issue you what’s called a closing officer
and the closing officer starts to work on your checklist to close the loan
standard loan, express loans would normally close anywhere from 15 to 30 days.
anything above that, if there’s collateral involved, which usually there is, would probably take anywhere from 45 to 60 days.
…depending on the industry, if there’s buildout and certain things involved.
so, it doesn’t take that much to get things through
the next big factor that comes in is maturity, these notes, if there’s non real estate involved, they’re all written for a 10 year period of time.
so you have 10 years with no prepayment penalty to borrow anything from $25K up to $10 Million
depending on what you want to do and what you’re going to use the money for
by no prepayment penalty, it means if it’s a 10 year note and you decide to pay it off in 3 years
we minus the interest and that’s what your payment is, you pay us off and your loan is off the books and you’re good to go
the next thing that we run into, the SBA is a unique program, it’s what we call off the balance sheet accounting
although you do sign personally, there is not doubt about it, if your spouse is on it, your spouse is going to sign personally as well
it never appears on your personal credit as a liability
it’s off the balance sheet
it will appear on your business credit
the only time it would come on is if you defaulted on the loan
so it still gives you the availability to borrow funds, period
to buy a house, to get a car, get a credit card, to do whatever you want to do, it doesn’t hamper you in that aspect
and a lot of people don’t understand that
and that’s the best thing, now you can
interest rates of SBA loans, depending on the product, can run anywhere from 4.5% up to 6.9%
we are fixed under SBA guidelines, we can only charge what we can
obviously, if you’re buying a $5 million property your rate is going to be better
and your term is going to be better
it’s no longer that 10 year term, it’s an amortization over 25 or 30 years
and your rate will be better if you’re doing something where we are doing buildout for you and working capital and finance your equipment
it will be a 10 year term and it will be a little bit higher on if you’re a startup or time in business
but a rule of thumb is anywhere from 4.5% to 6.9%
you know where you’re going to be
these are just a few of the many questions I get
I get an average of, when I did my checklist today, 63 different questions that people ask me
we would be willing here to post these and do anything you need on frequently asked questions within our website
but I wanted to take some time today to at least give you the basics of how everything works
thank you for your time and if you have any questions please feel free to call First Financial Leasing and Finance