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SBA Loans - Still Available?

There’s been a lot of negative news these past few weeks related to business lending. You’ve probably heard there’s a credit freeze and you may think that means nobody’s lending. But Don Johnson, owner of Diamond Financial Services, New Jersey, says that’s a misconception. “Our company works with over 25 lenders so we really know what’s going on with the state of SBA and franchise lending. We’re prequalifying a little more carefully, but our success rate is still high. In the media it’s all doom and gloom, but loans are getting approved. You just have to know how to do it. Most people don’t know how to do projections or put together a loan package. Over 80% of loans get declined due to packages that aren’t complete or correct. And the rest is simply not going to the right type of lender. The money is out there, you just have to know where to go.”

Still, things are different these days, which Johnson points out:

  1. Lenders are putting more emphasis on experience and some people may have to make a higher down payment. Down payments across the board on startup franchise loans could be more than 25-30%.
  2. Loans for newer franchise concepts need stronger borrowers.
  3. Lenders are being more cautious about quick expansion or concepts that have a high default rate on their SBA loans.
  4. More lenders are either changing their criteria or limiting their business to specific loan sizes, certain industries, or certain states. For example, a minimum loan that used to be $100,000 might now be $250,000.
  5. Lenders are taking longer to give loan approvals. Instead of 2 weeks, it can now be 2-3 weeks or maybe a month.

Johnson says things are especially good for franchise systems with a strong track record and 100+ units. “Some lenders are offering favorable terms such as 15-20% down with no collateral for certain franchise systems,” Johnson says.

For everyone else, Johnson says there are some changes pending with SBA, which should prove helpful. “The government is trying to give more incentives to lenders to start lending money through the SBA such as smaller fees and increasing the guarantee (potentially) up to 90%. And they’re trying to get the loan size increased under the SBA 7(a) loans from $2 million to $3 million. At the same time, the bailout package is trying to get more money to banks and get rid of some of their debt on the books. All in all, the lenders should be in a better position to lend and be more aggressive.”

Contact info: Diamond Financial Services www.FranchiseFunding.net

To learn more about franchise opportunities and business opportunities visit us at FranchiseHelp.

Running a Home Based Franchise Effectively

The first step in starting your home business should be in identifying the type of business you wish to get into. You have to ensure that the business you are entering does not have any legal or community barriers which would cause it troublesome to operate from home. The business should be viable to run from home and should be legally permitted.

Best Practices in Protecting and Enforcing Trademarks, Copyrights and other IP

Trademarks, copyrighted works, trade secrets and proprietary business information form the core of any franchise system, and are frequently a company’s most valuable assets. Trademarks, including service marks, logos, slogans and trade dress, define the brand identity as presented to the public. The “behind the scenes” business know-how on which the system is built and implemented by franchisees is embodied in a variety of copyrighted and proprietary works – operations manuals, proprietary processes, recipes and formulas, custom software, advertising copy to name a few.

Determining Your Priorities

At its core the decision to open a franchise isn’t a trivial decision. You are making a serious investment, but if you take all of the factors into account it can be an amazing one. But before you get there you need to sit down, analyze your needs, capabilities and limitations in relation to a franchise business. This could take a few days to consider or a few weeks or months. In either case, it is one of the most important steps in the franchising process, so don’t skip it.