Many – if not most -small businesses that are still in business are hanging on by a thread. Caught between a rock and a hard place, most small businesses are faced with finding enough cash to stay afloat and servicing existing customers while still trying to attract new business.It is such a unique balancing act, even the greatest circus performers couldn’t pull it off. So what is it a small business person can do now? Where is the money? How does a small business owner make the stimulus package work for his or her business now?
Well, we’ve taken the time to do some investigative work and received some real answers designed to help the small business owner get a hold on what is really going on with the Economic Stimulus Package.
First of all, banks are lending! There are banks who have continued to lend during this entire economic crisis. Where are they? Well, start by contacting your local SBA office. We recommend you contact them by phone and ask which banks or financial institutions in your area are making loans. Outside of the traditional banks, there are SBA financial lending partners like community banks and non-profits such as credit unions that may be easier to borrow from.
Next, there are some key criteria you must be aware of when seeking a loan. Because you are a small business, you are more than your credit score. Many non-traditional financial lending institutions are willing to consider you even after you have been turned down by a traditional bank. There are lending institutions that are making loans to business owners with credit scores in the low 600’s and high 500’s with documented unique circumstances that can be explained. They will even make loans to a person with a bankruptcy – with a viable explanation. Usually, these loans are micro-loans ranging from $10,000 to $25,000. For many business owners, this is all they need to get through the next 6-8 months.
Also, update and revise your business plan and/or marketing plan. Demonstrate new, creative and innovative ways your business is generating new customers and/or a plan to attract new sales in this highly competitive, technological and ever-changing economic climate. Show what you’ve done to stay in business this long and what you are willing to do to make your business work for the long run.
SBA even has a new loan program that will help businesses catch up on past due payments.
Under the stimulus package, the SBA is now waiving applicant fees and guaranteeing up to 90% of the loan amount under such programs like 7(a). They are even entertaining start-ups.
Yet, in still, there are people who are not getting loans. Who cannot get a loan?
Those with credit scores of 398 – 520. If you can’t pay or manage your personal credit, chances are you won’t pay or manage your business credit.
Those who cannot offer or know someone who is willing to offer a personal guarantee to pay back the loan.
The types of businesses most difficult to get funding for are:
-restaurants
-transportation (i.e., limo companies)
-hotels
-small construction firms (primarily doing residential work)
-spas
Did you know the most popular type of business to fund is any business that is related to “green” technology and is creating energy efficient jobs.
For more information, check out http://sba.gov/recovery/index.html.
To receive technical assistance (i.e., financial statement creation, filling out loan applications, etc.) in applying for SBA funding and/or understanding the tax implications for accessing financing under the new SBA guidelines, contact Optimum Tax and Accounting Services at 336-854-7083 ext. 303 or visit our web site at http://optimumtaxandacc.com/.
