SMALL BUSINESS LOANS TO START OR GROW YOUR COMPANY
Re-Post from Perry Sasnett, CEO Zero Point Incorporated
LOAN OPTIONS FOR SMALL BUSINESS ENTREPRENEURS
As a follow-on to my previous post , ‘Starting a Business’ where I mentioned the importance of a Business Plan for not only a road map to your success, but if you’re ever in need of a loan, especially an SBA loan. Well, let’s talk about a few options that are available, some are well-known and some less so, that may help you in either starting a business or growing one.
Now let me just caveat this blog by saying that I am NO entrepreneurial guru and the things that I do know I have either been lucky, both good and bad, or someone has shown me the way. I’ve been in business 9 years this November 21st I still have a lot to learn and eagerly strive to do so. So, without further ado let me share a few nuggets.
SUGGESTIONS FOR LEVERAGING A SMALL BUSINESS LOAN
The most obvious route, at least for me, is leveraging the SBA for a loan. They have several types that can assist small business’ to either start a business, which I used over 8 years ago, and others that will help you expand an existing one, like a 7(a). Which I was just approved for one so be sure to stay tuned for what that brings. Like with any loan or assistance program there are pros and cons and using the SBA is no different. It’s up to the individual or collective ownership to decide the worth of any of the loan options available. It’s been my experience, outside the extensive paperwork required, that one of the more bitter pills to swallow is to effectively sign all your personal assets away if the business tanks badly. The SBA, the bank, and the milkman pretty much have rights to all your stuff first. If that weren’t bad enough you’re beholden to whatever financial institution that has loaned you the money until the day that debt has been paid in full. What does that mean? It’s basically “Mother may I”…mother may I buy this equipment, mother may I change my business structure, mother may I go to the bathroom, etc., etc., etc.. Now I may be exaggerating a bit but I think you get the picture. Boy I hope my bank isn’t reading this!
For more info, check out the SBA (Small Business Administration) website: https://www.sba.gov/loanprograms.
On a like note and more friendly nod to my bank, Suntrust has one the best, if not the best, track records for getting SBA loans. Check out the attachments.
Other nice bennies out there are City and State incentives. Make sure you do your homework as there may well be some very nice incentives in your State & City that you can leverage to help grow your business. One of my companies, Zero Point, was just awarded a very nice incentive package from the Virginia Beach Economic Development program this year for nearly $300K.
Now, here’s one more nice little nugget that I just found out about…IC-DISC! If you manufacture goods and sell overseas then you really need to check this out as you can potentially save a grunch of money on taxes:http://www.thetaxadviser.com/issues/2014/dec/tax-clinic-01.html. Anytime you can find some tax savings take it…take them all! It adds up. Now don’t get me wrong as I do not mind paying taxes, and pay more than most I would say, but when paying up to 50% of profit it’s REALLY hard to grow your company as well as take care of your employees. A quick example: Say your net profit is $1M, sounds like a lot right, but now about give 1/2 of that to Uncle Sugar (US Government that is). So you still have $500K in the bank…sniff, sniff you may say. Don’t forget about insurances, business licenses, rent, cash to buy things to make money and oh yeah, and let’s not forget about what’s really important, payroll, which will take a sizable portion if not the rest, especially if times are lean. How does original $1M profit sound now? Not as good anymore right?! That’s business reality! And to think some politicians and some regular folks think small business should pay more.
So to summarize, get a really good, honest tax accountant and look for ways to optimize your returns, look for incentive programs from City and State, be prepared when applying for and during the life of a loan and also look to see if you’re special: Service Disabled Veteran (like myself), woman-owned, 8a, etc.
Hope this helps and I plan to publish more business nuggets in the future so stay tuned.
Keep your head on a swivel for business dangers and pitfalls, keep an eye out for opportunities and new teaming partners, keep your nose to the grindstone always, keep an ear to the ground from customer feedback and trends, don’t burn bridges if it can be avoided, and don’t air your dirty laundry (especially skivvies) to other companies or customers.
Learn more about Zero Point Incorporated, A Virgina-based firm by visitng www.zeropointusa.com .