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SBA Loans

FAQs

How do I get a small business loan?
Documentation requirements may vary; contact Southside Bank for specific information you must supply. Common requirements include:
  • purpose of the loan
  • history of the business
  • financial statements for three years (existing businesses),
  • schedule of term debts (existing businesses),
  • aging of accounts receivable and payable (existing businesses)
  • projected opening-day balance sheet (new businesses),
  • lease details,
  • amount of investment in the business by the owner(s),
  • projections of income,
  • expenses and cashflow,
  • signed personal financial statements and personal resume(s).

How do I write a business plan?
If you go to SBA's home page, www.sba.gov, and select "Starting," you will find information on starting a business and writing a business plan - see www.sba.gov/starting. Under "SBA local resources" you can find local contacts such as the Service Corps of Retired Executives and the Small Business Development Center, that provide FREE one-on-one counseling in the area of starting and expanding a small business. They can assist you by critiquing your business plan and your business ideas. Also, SBA has Business Information Centers (BICs) nationwide that are similar to a business library. There you will find reference materials on starting and expanding a business, including information on how to write a strong business plan. Some of the Centers have actual samples of business plans that have been written. You can locate a center by selecting "Local SBA Resources" under www.sba.gov, as well.

What type of collateral do I need for a loan?
Repayment ability from the cash flow of the business is a primary consideration in the SBA loan decision process but good character, management capability, collateral, and owner's equity contribution are also important considerations. All owners of twenty percent (20%) or more of the business are required to personally guarantee SBA loans.

The SBA does not deny approval for a SBA Guaranty Loan solely due to lack of collateral; however, it can be used as a reason, in addition to, other credit factors.

For more information on requirements on a SBA Guaranty Loan, as well as, our guaranty loan programs available, please visit www.sba.gov/financing/indexloans.html

Is there any business assistance available in my area?
Yes. There are 12,400 Service Corps of Retired Executives (SCORE) chapters and approximately 1,000 Small Business Development Centers (SBDC) nationwide. SCORE provides free, expert advice based on many years of firsthand experience and shared knowledge, on virtually every aspect of business. The SBDC provides a variety of management and technical assistance services to small businesses and potential entrepreneurs. To locate the nearest SCORE or SBDC in your area, please visit www.score.org and enter your zipcode. You may also want to visit one of our Business Information Centers (BICs) that have various books, videotapes, and training workshops on starting and expanding your business. This includes marketing, business planning, legal requirements, bookkeeping, etc. To locate the nearest BIC, please visit the aforementioned web site address and click on your state.

What classifies a business as "small"?
There is no "official" certification process to be determined as a small business. It is a self-certifying and paperless procedure. The U.S. Small Business Administration (SBA) uses the North American Industrial Classification System (NAICS) in determining size standards; which as of October 1, 2000, replaced the Standard Industrial Classification (SIC) Codes. To see if your business is considered small by the federal government, or to determine which NAICS Code(s) is applicable to your business, please go to www.sba.gov/size.

How can I get my business certified as a woman or minority owned?
On a Federal level, Congress considers a minority-owned business as generally anyone other than white. The business must be owned and at least 51% controlled by one or more minorities. Women are not considered minorities. It is a self-certifying process and no paperwork needs to be filled out.

However, your state and local government may have different rules and regulations regarding their contracts and what their definitions are. Consult your state and local government for rules and requirements.

The U.S. Small Business Administration (SBA) has a certification process for the 8(a) Business Development Program. This program assists in the development of small companies owned and operated by individuals who are socially and economically disadvantaged. Businesses eligible for this program may receive federal contracting set-asides and other business-development support to help the company gain access to the economic mainstream. To learn more about this program, please go to www.sba.gov/8abd.

There is a certification process to be considered a Small Disadvantaged Business (SDB). The SDB certification ensures that small businesses are owned and controlled by socially and economically disadvantaged individuals meeting SDB eligibility criteria. If you are considered a SDB, you may receive a price evaluation credit of up to 10% when you bid on a federal contract. For more information on this program, please go to: www.sba.gov/sdb

Also, the HUBZone Empowerment Contracting Program encourages economic development in historically underutilized business zones, through the establishment of federal contract award preferences for small businesses located in such areas. To learn more about this program, please go to https://eweb1.sba.gov/hubzone/Internet.

What type of interest rate, terms and fees does the SBA require on its Guaranty Loan Program?
Your loan-repayment schedule depends on the use of the proceeds and the ability of your business to repay. The general terms are five to ten years for working capital; and up to 25 years for fixed assets such as the purchase or major renovation of real estate or the purchase of equipment (not to exceed the useful life of the equipment). Both fixed and variable interest rates are available. The interest rate is negotiated between the borrower and the lender/bank. However, lenders generally may not charge over the maximum rate of 2.25 percent over the lowest prime rate for a loan with a maturity of less than seven years and 2.75 percent over prime for a maturity of seven years or longer. For loans under $50,000, the lender's rate may be slightly higher.

How do I find an investor for my business?
The Small Business Administration's (SBA) ACE-Net Program provides an Internet-based, secure listing service for entrepreneurs seeking equity financing of $250,000 to $5 million from accredited "angel" investors. Using ACE-Net, the angel can negotiate directly with a listed company to provide equity capital funding and advice for a stake in the entrepreneur's corporation. ACE-Net is operated as a partnership between the SBA's Office of Advocacy and a number of non-profit organizations nationwide. It will ultimately be turned over to a private nonprofit organization. You can access ACE-Net at www.sba.gov/gils/SBA1998Mar05.101626.html. Also, the Small Business Investment Company Program (SBIC) fills the gap between the availability of venture capital and the needs of small start-up or growing businesses. Licensed and regulated by the SBA, SBICs are privately owned and managed investment companies that make capital available to small businesses through investments or loans. They use their own funds plus funds obtained at favorable rates with SBA guaranties. SBICs are for-profit companies whose incentive is to share in the success of small businesses. In addition to equity capital and long-term loans, SBICs provide debt-equity investments and management assistance. To learn more about this program, please go to www.sba.gov/INV.

What is PRO-Net and SUB-Net?
PRO-Net is an online database of information on thousands of small businesses and serves as a search engine for contracting officers, a marketing tool for small companies, and a "link" to procurement opportunities and other important information. It also provides links to the online Commerce Business Daily, federal agency home pages and other sources of procurement opportunities. It offers free registration to small businesses. Simply access the PRO-Net web site at http://pro-net.sba.gov and follow the instructions. Trouble calls or problems with logins should be addressed to (202) 205-7312/7325 or Fax 202 205-7324.

SUB-Net, an extension of PRO-Net, is primarily for prime contractors to post subcontracting opportunities. These opportunities may or may not be reserved for small businesses. They may include solicitations or other notices, such as a search for "teaming" partners and/or subcontractors for future contracts. The SUB-Net site enables small businesses to use their limited resources to identify and bid on concrete, tangible opportunities. While the web site is designed primarily as a place for large businesses to post solicitations and notices, federal agencies, state and local governments, nonprofit organizations, colleges and universities, and small businesses can also use it for the same purpose. You can access SUB-Net through the PRO-Net home page by choosing the "Subcontracting Opportunities" button. Or, you can go directly to SUB-Net at http://web.sba.gov/subnet.


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