Forums: Discussions for entrepreneurs and small business.

Hello all,
I posted a while back for advice on finding cash to show injection into an SBA loan and received some great advice.  I am happy to report that we have been able to secure 30% injection, and thanks for the advice!

We are attempting to start a franchise.  The franchisor is assisting us with financing.  We meet all lending requirements to secure our loan except one:  We have great credit, we have low debt to income ratio, we have 30% injection.  What we do not have is collateral.  We have researched and exhausted our options - we just don`t have it. 

The franchisor`s finance department has informed us that without sufficient collateral, we will not be approved by a lender for an SBA loan.

 

However, I just heard elsewhere that an SBA lender cannot turn one down for a loan based solely on lack of collateral.  I verified this information in SBA`s lending guidelines.

 

Anyone know what gives?

 

 

The SBA guarantee is supposed to mitigate the lack of a secondary source of repayment.  Fewer and fewer lenders are treating it that way and instead want a fully collateralized loan. 

 

Take a look at my blog postings and an online article in NJBIZ...

 

Franchise Finance - Lenders Tighten Up

 

Why Are SBA Loans Drying Up?

 

SBA - Experience Wanted

 

Franchises Battle Credit Crunch (NJBIZ)

 

Hope these are helpful.

 

Marshall Lebovits

www.Funding911.com

Mr. Lebovits,

I found the article "Why Are SBA Loans Drying Up" very informative and helpful.

 

After reading through your blogs, I`d like to know your thoughts on our specific situation.

 

Our restaurant equipment will serve as *some* collateral, but it is our understanding from the franchisor that we are short and will need to come up with more.

 

I can give you more specific details if you need them.  Thank you.

Faye Brainard