The world is full
of willing people -- those who are willing to work; the rest willing
to let them.
Robert Frost,
Poet
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Writing A
Business Plan:
SBA
APPLICATION PROCESS -- From Daunting to Do-able
The SBA
application process is, at best, daunting. The best approach:
Tackle it with a vengeance.
The SBA
Application Paperwork
No one can ever accuse the
government of overlooking paperwork. As great as the Small Business
Administration program is, the SBA application paperwork is out of control.
But, thousands of businesses have muddled
their way through it, so perhaps you can too. Click
here for a copy of the application for an SBA loan -- it is #4 on the list. This application
is IN ADDITION to any business plan you may submit. The application is
pretty cold -- it is your business plan that will warm the souls of your lender.
There could be other forms that you need as
well. Check the list of forms on the link above, as
well as the checklist in #1.
The SBA application looks about 6 inches
tall, all in tiny little print. Actually, it's not that bad -- it
just seems like it.
Although there are millions upon millions of dollars in the SBA
coffers, they aren't giving it away. In fact, it usually feels like
we have to jump through hoops to get to the money at all.
One of the most important things to remember is: Your SBA
bank HAS to make loans. It's the only way the bank can make
money. It absolutely has to lend that money to small businesses,
businesses just like yours.
So why all the *(^%$#!* paperwork?
Because it's a government-run program. And because the bank has
shareholders that it must report to.
John Hanlon, assistant vice president for commercial and SBA lending at
Community Bank of Mantee (Florida) took the opportunity of an interview to
encourage small business owners.
Among his observations:
1. There's not nearly as much paperwork as business owners fear.
2. He doesn't like making business loans under $100,000, and will look
to other sources, such as a home equity loan, in the lower ranges. A
business loan for $20,000 takes nearly as much paperwork and follow up as
a business loan for $200,000, so the bank is really better off making the
$200,000 loan.
3. After an initial interview, he will ask you to come back with
preliminary, written exhibits, including a brief synopsis about your
company and details about how you'll spend the bank's money.
4. For start up businesses, he will ask for projected operating
expenses.
5. He looks for a 1.2 debt service ratio by six months to a year. That
means 20% of cash flow will be left over for unexpected contingencies.
6. He will look for you to put 15% to 30% of your own cash into the
project.
Above all, I liked this piece of advice: "Don't be intimidated.
The banks want to do deals."
Hanlon's comments could be echoed in banks throughout the country. So
go in prepared, and take your best shot. The money is there.
