58 THE DISTRIBUTOR’S LINK Ami Kassar Ami Kassar is the founder and chief executive officer of Multifunding LLC, speaker, and author of The Growth Dilemma. Heavily involved in business finance for two decades, Ami has advised the White House, The Treasury Department and The Federal Reserve Bank on the state of the financing markets. A nationally-recognized expert on business capital, Ami Kassar has helped over 1,000 entrepreneurs raise over 0 million of debt for their businesses. For more information on Ami Kassar, please visit www.AmiKassar.com. SECURING FUNDING FOR YOUR SMALL BUSINESS Busting the 3 Biggest Myths about the Small Business Administration. Given that politics are always a hot topic, you’ve likely heard plenty from both political parties about how government at all levels simply doesn’t work. That’s not a new complaint, and just about everyone can share a story about some government nightmare they’ve endured. But there’s a federal agency that bucks the trend: The Small Business Administration. The SBA enjoys broad support from all corners of the political spectrum—and deservedly so. That’s because the SBA, which dates to 1953, fulfills its mandate of helping small businesses. Don’t believe me? Google it. Sure, you’ll find scattered complaints, but the SBA generally gets strong reviews. That said, the SBA doesn’t always get the credit it deserves and there’s a lot of misinformation going around as well, especially among entrepreneurs who are missing out on strong financing possibilities. Let’s talk about three of the biggest myths surrounding the SBA. The SBA Lends Money Although the SBA can directly lend money in cases of disaster, that’s not its main role when it comes to lending. Instead, it serves as a government guarantee program for banks and nonbanks. That means it essentially serves as a backup to lenders who might otherwise not be interested in making loans to smaller and/or unproven businesses—it offers guarantees up to 85% for loans up to 0,000 and 75% for loans bigger than that. Because lenders are less CONTRIBUTOR ARTICLE likely to endure the full brunt of defaults, they’re more likely to make loans to unproven businesses. The SBA does set requirements and application process details. Applications will require personal background information, a business plan, personal and business credit reports, income tax returns, bank statements, and a resume, among other things. It’s also possible personal or business collateral is required. One benefit for you, the borrower, is that the loan terms tend to be longer (up to 10 years) and require smaller monthly repayments because of good interest rates. The SBA Is Only For Mom-And-Pop Shops Mom-and-pop shops are definitely among the kinds of businesses the SBA is looking to help, but they can also work with much larger businesses. Through its flagship 7(a) program, SBA-backed loans can be as large as million for needs such as working capital. And through its lesser-known 504(b) program, as much as .8 million can be obtained for businesses seeking to buy real estate or major equipment. A million loan, not to mention a .8 million loan, is way above what a mom-and-shop needs. While there’s no one-size-fits-all template for a typical SBA loan customer, most are businesses that are going to have anywhere between ,000 and million in annual revenues and up to 40 employees. Those businesses are likely to be cash flow positive and are profitable. Of course, if mom and pop need a loan, small amounts are available, too. There are no minimum guaranty amounts for any SBA loan program. CONTINUED ON PAGE 134
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