• Financing is an important ingredient in most business purchases and startups. There are several "must do" items that future borrowers will need to provide lenders and/or investors.
• It is important that your credit history be good, if there is a problem it must be explained to the satisfaction of the lender.
• Lenders will expect you to be at risk also. Startup projects will require 30% to 33%, on "average", owner’s equity infusion. Purchasing an existing business will require an "average", 20% owner’s equity infusion. This equity can take the form of items such as cash, equipment, real estate and miscellaneous startup that will be part of its startup funds needed.
• Lenders and investors want to see a complete business plan.
• A borrower must think about how the note will be collateralized. The lender will not want to be at risk if possible. The lender will want as collateral and be in first lean position any assets the business purchases with borrowed funds.
• The S.B.A is a cash flow lender and in some cases does not require 100% collateral if the borrower does not offer collateral to that extent.

Other areas lenders look at:

• Purpose of loan.
• History of business.
• Financial statements for three years. (existing business)
• Schedule of term debt. (existing business)
• Aging of accounts receivable and payable. (existing business)
• Projected opening day balance sheet. (new business)
• Lease details.
• Projections of income, expenses, and cash flow.
• Signed personal financial statements.
• Personal Resumes.
• Good character.
• Management expertise and commitment necessary for success.
• Sufficient funds, including the SBA-guaranteed loan, to operate the business on a sound financial basis.
• Feasible business plan.
• Ability to repay the loan on time from projected cash flow.

The SBDC counselor will assist you and explain and questions you may have.

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