The U.S. Small Business Administration is offering loans through funding provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Donald Trump. However, if you are a small business or nonprofit, there are significant obstacles in the Act that might make it better for you to look to private companies like Financing Solutions for a Line of Credit for your business or nonprofit.
Summary Details of the Trump SBA Small Business Act
- Your State will have to declare disaster zones first
- These loans are processed, underwritten and issued by the government.
- The state your business is in must submit documented business losses for at least five businesses per county to qualify for the program.
- The SBA Economic Injury Disaster Loan assistance declaration will make disaster loans of up to $2 million available to small businesses and private, nonprofit organizations in states that are approved for the program.
- These loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the impact of COVID-19.
- SBA will review financials month by month and year by year
- Will require a lien on your business and home (personal guarantees)
- The wait to get a SBA loan will be long. No one knows the timeframe
- If you have $350k in current debt then SBA requires a total refinance
- If under $350k in current debt SBA will take a second lien position
- If you have an existing SBA Loan you are not eligible
- SBA Lines are now increased from $350k to $1,000,000 for Line of Credit
- Must have 650 personal credit score, no bankruptcy, 2 years in business
- Business must have been cash flow positive (profitable) for the past year
- Make sure you get your 2019 tax returns in because they are required
- Start to get documents together like a personal financial statement
- SBA will want a business debt schedule
- Three years of business and personal tax returns
- If partners have over 20% equity they will have to show their tax returns
- Line approval is 10% of top-line or 85% of AR
- Revised forecast/budget for 2020 (best case, medium, worst)
- SBA does not look at collateral to back up the loan
- Nonprofits may not be eligible for SBA Loans. Still unclear.
- If you owe the IRS you can not get an SBA Loan
Problems with the Trump SBA Small Business Act
Anyone who has tried to apply for an SBA Loan before knows that the process is notoriously slow, and the paperwork needed voluminous. In general, past SBA loans typically take 6-9 months to get in place. In general, it often takes months to even know if your business will be approved even after spending a week filling out the forms required.
In addition, even though the SBA budget was doubled by the Coronavirus Preparedness and Response Supplemental Appropriations Act, the staffing level at the Small Business Administration has been cut significantly in the last 3 years meaning that the time it will take to review applications might be even longer then what has been seen in the past.
Details of Financing Solutions Line of Credit Program
Financing Solutions is a 5 star and A+ rated financing company that provides Lines of Credit to Business and Nonprofits that have yearly revenue over $400,000. The business owner or the nonprofit Executive Director (or member of the board) must have a personal credit score of over 650 to qualify. There are no personal guarantees or collateral required.
The Line of Credit Application takes less than 2 minutes to apply. Once you fill out the online application you will receive a written offer to consider and the Line of Credit costs nothing to set up and nothing until used making it a fantastic cash backup plan if you don’t need to use the line immediately.
If you decide to move forward with the offer letter, Financing Solutions will ask for some easy to get, back up documentation including 4 months of bank statements, a recent tax return or 990, a voided check and a few other easy to get documents. The whole process could take 4-7 days.
Once approved you are then set up on Financing Solutions secured web portal which you can log into at any time to request funds, see balances, pay off the line, etc. All funding requests are wired immediately into your bank account when requested and you can also log in to pay off the line balance at any time. The process is simple and fast.
The Line of Credit can be paid off at any time making it inexpensive for short term emergencies or opportunities.
Each year, the line of credit is renewed yearly at no cost.
Why is Financing Solutions Different?
Financing Solutions began in 2012 by two successful serial entrepreneurs (Stephen Halasnik and Keith Giovannoli) each of whom had numerous experiences with commercial banks themselves.
Stephen and Keith both felt there must be a better way to provide Lines of Credit to small businesses and nonprofits because the commercial and local banks just didn’t seem to understand how smaller organizations worked plus they didn’t really want to work with organizations under $10 million in yearly revenue.
Stephen and Keith both set out to make a Line of Credit process simple, easy and fast so that good organizations could have a cash backup plan when needed. What they came out with has been revolutionary.
Some of what Financing Solutions incorporated into their line of credit program was and still is, ahead of its time. There is no cost to set up the line of credit as well as no costs when the line isn’t being used. The determination if the application will be approved is based on your existing cash flow and not any collateral or personal guarantees. Finally, the line of credit is easy to get in place allowing one to get an answer about approval in minutes versus months.
The key reason Financing Solutions has become a leader in providing Lines of Credit to small organizations is because Stephen and Keith have come from main street and not wall street. They understand that there are a lot of good businesses and nonprofits that will use their lines of credit wisely and will pay it back.
To apply: click here