Author: RogerP

Article by Roger Schlueter, MBA

The SBA 504 Loan Program touts as one of its benefits a LOW DOWN PAYMENT. The down payment is Ten Percent but that is if you are an existing business that is expanding or just buying new stuff.
 
    1) Existing Businesses must inject 10% of the Total Project Costs.

    2) New Businesses must inject 15% of the Total Project Costs.  The Certified Development Company, 
        CDC that approves the project and packages the project for SBA approval can deem the New Business
        an Existing Business if the Management has had experience with running a business in the past and
        that would reduce the Down Payment to 10%.
 
    3) Financing a building with Limited or Special Purpose Property like a Motel, Gas Station / Convenience
        Store, Nursing Home or Sports Facility, etc. must put in an additional 5% and there is not way around
        this requirement.

    4) The business must put in 20% if the business is new and the building is Special Pupose. The
         additional equity will reduce the SBA’s Contribution.

    5) Land can be used as equity but it must be supported by an appraisal.

    6) The Equity can be Borrowed as Seller Financing or Elseware but the Lender of the Equity’s Lien must be
        Subordinate to the SBA’s Lien. The Lender may not have the loan paid off faster than the SBA. (that
        means a 20 year term). You can always borrow the Equity and then several years later ask the SBA if you 
        can pay it back faster than the SBA, they will usually agree.

    7) Other Collateral can be used as equity but if borrowed the borrower must demonstrate Repayment from 
         the Cash Flow of the business or other sources.
 
The problem with borrowing the Equity from the Seller of the Property (which is the most used way to borrow the Equity) is that the Seller gets a subordinate lien and he has a long payback. You will find it hard to get agreement from the seller on these two points.
 
Please see my website for contact information at www.schlueterfinancial.com

Article by Roger Schlueter, MBA

The Break-even Point for a business is The Amount of Sales where the company does not make any money but does not lose any money either. The Amount of Sales where the company literally Breaks Even. This number is asked consistently by banks when applying for a loan. Most bankers know that it is but  I would challenge most bankers to show me how to arrive at Break-even off the top of their head. I guarantee that you will impress, even the most critical banker, if you can tell him the Break-even Point of your business, especially if the business is a Start-up Business.

The Formula for Break-even Point is:

Break-even Point in $ (dollars) =  Fixed Expenses (divided by)  
                                                             Contribution Margin ( ratio of %)

O.K. , Now WHAT IS A CONTRIBUTION MARGIN ?

You need to compute the Contribution Margin in dollars then convert that number to a Percent (%) by dividing by the total Sales figure.

Contribution Margin:

Sales dollars                                    $100,000
  – (Minus) Variable Expenses       $  40,000
 = Contribution Margin                      $  60,000  

Contribution Margin as a percent (%)   60,000 / (divided by) 100,000  =  0.60 or 60%

Fixed and Variable Expenses: 

Fixed Expenses are Expenses that your company has to pay even if you have no Sales. Examples are Rent, Electric (to a point), Salaries (to a point), Insurance, Property Tax, Maintenance, Interest or payments on loans, Etc.

Variable Expenses are Expenses that your company incurs when you have Sales. Examples are Purchases of Product, Labor to produce Product, Electric increase, Sales Commissions, Shipping, Mailing Costs, Etc.

Final Example using above information and with Fixed Expenses at $20,000. 

Remember the Formula ? 

Fixed Expenses for the period                $20,000
/ (Divided by) the contribution Ratio       0.60 (60%)
= BREAK-EVEN POINT IN $ (DOLLARS) FOR THE PERIOD IS  $33,333

THIS $33,333 IS THE SALES YOU MUST MAKE TO BREAK-EVEN. ANY ADDITIONAL SALES AND YOU WILL BE MAKING MONEY. THE EXAMPLE PUTS THE REAL SALES AT $100,000 AND IF THIS WERE TRUE THEN YOU WOULD BE MAKING PROFIT ON EVERY ADDITION DOLLAR OF SALES OVER THE $33,333. 

This is not an indicator of Profit, the Income Statement or Profit and Loss Statement is the determining factor of Income and profits. This Break-even Point tells you the Sales you Must Make to cover your costs, and that any additional sales you will be making money.

Please see my website at www.schlueterfinancial.com for contact information or additional information.                 

Article by Roger Schlueter, MBA

INFORMATION IN THIS SECTION WAS TAKEN FROM THE SBA SOP SECTION ON COLLATERAL.

Collateral for the SBA Guaranteed Loan, like the SBA 7a Loan, is definitely not the same as the amount of Collateral that banks usually get from the borrower. Usually, with a bank, the borrower must fully collateralize his or her loan. Actually it realy depends on what value the bank puts on the Collateral. The bank may value the collateral on a liquidation value that has a market value of probably, one hundred twenty five percent or more of market value.

SBA requests are not declined solely on the basis of Collateral. SBA is aware that most banks will use the program if they Lack Adequate Collateral on a Business Loan. Because of this most SBA Loans are usually not declined on the basis of Collateral. Banks decline Business Loans on the basis of Collateral all day long. SBA does expect the bank to use all available Collateral of the Business and also Personal Assets of the borrower to Collateralize the loan.

If the loan proceeds are used to purchase an asset, the SBA wants a first security interest in that asset. If the loan is to Refinance Existing Debt then the Security must be, at least, the same security as the debt being refinanced.

SBA conciders the loan to be “Fully Secured”, if the lender has taken all available assets and the liquidation value is equal to the loan amount.

Personal Residence as Collateral – SBA does not require the Borrower to pledge their residence if the equity is less that twenty-five percent. The bank on the other hand will want the house if there is no equity. Let’s face it nobody wants to move out of their house, equity or not.

SBA will try to take as collateral any asset that is available from the Borrower. The SBA will also expect the Borrower to pledge assets jointly owned by his or her spouse, even if the spouse has no interest in the business.

Guarantees – Bankers do not concider Guarantees as Collateral but the SBA has this section under the Collateral Section. SBA wants Unlimited Full Personal Guarantees from anyone with 20% or more ownership. SBA wants all spouses to sign an Unlimited Full Personal Guarantee. Anyone who changes their ownership to less than 20% within 6 months is still subject to the Unlimited Full Personal Guarantee unless fully divested of any ownership prior to the application. Anyone owning less than 20% can usually sign a Limited Personal Guarantee (Limited to an amount). If no one owns 20% or more then one of the owners has to give a Unlimited Full Personal Guarantee.

Appraisal Requirements – An Appraisal is required if the SBA Loan is Greater than $250,000 and is Collateralized by Commercial Property. Banks will probably get an Appraisal reguardless of the amount. The SBA has No Appraisal Requirements for Non-Commercial Real Estate securing a Personal Guarantee. Equipment Appraisals can usually be accepted with a Qualified Supplier or Dealer of said Equipment writing a letter stating the value and signing and dating the letter.

 Please look at the SBA SOP for any Guarantee or Appraisal Questions that you have. This has been only a Summary and the SOP is more detailed and as such, More Confusing.

Please see my Website at www.schlueterfinancial.com for contact information and additional information.  
 

Article by Roger Schlueter, MBA

Equity Injection for SBA Guaranteed Loan (Information for this Article was taken from the SBA SOP 50 10 (5) on pages 188 to 190.)

Amount of Equity Injection – The SBA usually lets the bank set the amount of equity but the SBA will set Ten Percent as a Minimum.

Source for Equity Injection

    1) Cash – Cash is King

    2) Cash – Borrowed under the following Rules

   – Personal Credit for Injection into Business may be allowed if it can be shown that repayment will be made from sources other than The Cash Flow of the Business (Salary of Borrower from Business being financed does not qualify).

    –  The Lender must disclose Loans made to the individual for injection as equity into the business. The Lenders Credit Analysis must show what impact the loan has on Business and Personal Balance Sheets and Sources of Repayment. If the Bank providing the Personal Loan is also the Participating Lender then the Bank must submit the Application though the Standard SBA 7a Processing.

    3) Assets other than Cash

    – Assets will be valued through an appraisal or independent third party. This is required if the Valuation is Greater than Depreciated Value. Usually if the asset is equipment the borrower can use a letter valuing the equipment. This letter must be from someone or some company that sells or distributes this equipment like a supplier.

    – The SBA may use Equity that a Borrower has in his current business if he is an Existing Business. This has to be Approved by SBA. 

    4) Standby Debt

    – Owners Debt or Debt Due to the Owner may be considered Equity if it is on “Full” Standby (full standby means the owner cannot receive any payment of principal or interest on the loan). Partial Standby allowing Interest Payments may be allowed if the business has “Adequate Historical Business Cash Flow Available to Make the Payments”. You will have to attach a copy of the Note to the Standby Agreement.

The Following is Not Considered Equity: 
– Value or Cost of Education
– Borrowed Funds that Do Not Meet the Previous Guidelines

Documentation of Equity Injection

    – The Best Documentation of a Equity Injection is Money Given to the Bank, and then Allowing the Bank to Disburse All Funds for the Project including the Equity Portion.
    – The Bank should also show copies of the Borrowers Bank Statements for the Previous Two Months or More that Document the Equity’s Existence. 
    – If the Business Expends the Funds, the Checks for the Amounts and the Checks of the Money going into the Company as Equity Should be Provided.
    – This Documentation is needed by the Bank to Ensure that the SBA Honors It’s Guarantee. Most Banks will be Very Particular about the Dispursal of SBA Funds and the Amount of Equity Coming from the Borrower and put into the Business.      
    

Article by Roger Schlueter, MBA

The SBA 7a Program is the largest SBA lending program that the Federal Government operates to help Small Business to Borrow Money. There are many programs that are offshoots of this program. The SBA 7a Loan Program basically Guarantees loans made by banks to small business borrowers. This guarantee percent can fluctuate and be changed by the SBA within the program but once the Guarantee is in place it does not change for the length of the loan. For the purpose of this article the SBA 7a Program will be the only SBA program covered but believe me, this program is the Mother Of All SBA Loan Programs.

Loan and Guarantee Amounts 
The Maximum SBA 7a Loan Amount is $5,000,000. The Guarantee is 75% of this Maximum Loan which is $3,750,000. The Guarantee amount is 85% on amounts of $150,000 or less and 75% on amounts over $150,000.
 
Loan Maturities
The SBA 7a Loan Program is very lenient with the maturities of the Use of Proceeds Assets. Inventory or Working Capital has a maximum maturity of 10 years. Equipment, Furniture and Fixtures also have a maximum maturity of 10 years unless the Useful Life of the Asset is longer, then the maximum maturity is 25 years. Usually most equipment will have a life of 10 years. Real Estate has a maximum maturity of 25 years. 
– Remember if you do one loan for a variety of assets then you can use a blended maturity. The best way to do a blended maturity is by using a Weighted Average of the Assets. I have an entry in this blog that describes the Weighted Average. 

Interest Rates 
The SBA Defines Variable Rates, Fixed Rates, and Fixed Interest Rate Swaps. This article will cover the Fixed and Variable Rates that are quoted on their Quick Reference Chart in the SOP.

SBA 7a Loans of $25,000 or less           Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity less than 7 years)                     Optional Base Rate + 4.25%

SBA 7a Loans of $25,000 or less           Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity 7 years or more)                      Optional Base Rate + 4.75%

SBA 7a Loans of $25,000 to $50,000    Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity less than 7 Years)                    Optional Base Rate + 3.25%

SBA 7a Loans of $25,000 to $50,000    Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity 7 years or more)                      Optional Base Rate + 3.75%

SBA 7a Loans Greater than $50,000      Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity Less than 7 years)                    Optional Base Rate + 2.25%

SBA 7a Loans Greater than $50,000      Interest Rate cannot Exceed Prime, LIBOR, or SBA
(Maturity 7 years or more)                      Optional Base Rate + 2.75%

**Lenders are Permitted to add an additional 2% for loans of $25,000 and less and can add an 
    additional 1% for loans greater than $25,000 but less than $50,000.***

SBA Guarantee Fees
The SBA levies basically two fees on the SBA 7a Guaranteed Loans. The first fee is paid by the bank and cannot be passed on the the borrower. This fee is an ongoing lender guarantee service fee and is set at time of approval. This fee has historically been about 0.50%.
The Second Fee is the SBA Guarantee Fee and is paid by the borrower and can be added to the loan under other. This fee is as follows:

Loans of $150,000 or less                Fee is 2% of the Guaranteed Portion and the Lender can 
                                                        keep 25% of the fee. 

Loans of $150,001 to $700,000      Fee is 3% of the Guaranteed Portion.

Loans of $700,001 to $5,000,000   Fee is 3.5% of the Guaranteed Portion up to $1,000,000
                                                       Plus 3.75% of the Guaranteed Portion over $1,000,000.

***Short Term Loans with Maturities of 12 months or less pay a Fee on the Guaranteed Portion
      of 0.25%.***

Extraordinary Service Fee –  up to 2%, usually for Construction and Asset Based Lending Costs.

The SBA Guarantee Fee, Packaging Fee, and Out of Pocket Closing Costs can be added to the loan. The SBA Annual Service Fee cannot be paid by borrower, it is paid by the Bank. 

Late Payment Fee – This fee is not to exceed 5% of the regular payment amount.

Assumption Fee – This fee is not to exceed 1% of the Principal Balance Outstanding. This is when someone is assuming the loan of a borrower – borrower sells the business and borrower assumes the loan.
 
This seems complicated but most banks that do SBA Loans know the fees and will charge them accordingly. Any Agent charging a Packaging Fee or Referral Fee must fill out a SBA Form 159 and it will be signed by the Agent, the bank and the borrower. 

Article by Roger Schlueter, MBA

Weighted Average is an average based upon the individual portion as a percentage of the whole.

Example:
Lets say that we decide to borrow money with a bank or the SBA (U.S. Small Business Administration). We are are combining several different Assets into one loan. These different Assets each have their own term of life or period for you to pay the Asset off.

Working Capital*                $    5,000            5.0%
Equipment                           $  15,000          15.0%  
Real Estate*2                      $  80,000          80.0%
Total                                       $100,000        100.0%

First we take the Assets and their percent of the total loan.

Working Capital*                10 Years    x          5.0%        =   0.50 years
Equipment                           10 Years    x        15.0%        =   1.50 years
Real Estate*2                      25 Years    x        80.0%        = 20.0   years
Total                                                                 100.0%       =  22.0   years

Secondly we take the Assets life in years and multiply that times the percentage. This is the years for each Asset. Then we add them up and get a term for a loan with different Asset life. A weighted Average.
 
*  We used the SBA Term for Working Capital. Most Banks will go only 3 -5 years.
*2 We used the SBA Term for Real Estate. Most Banks will go only 20 years. 

Article by Roger Schlueter, MBA

The Resume for a Bank Loan really depends on whether you are a Start-up Business and New or whether you are an Existing Business and have been in business for many years.

Start-up Business Resume
The Resume for a Start-up Business should show several attributes to the Bank or Financial Institution. The Resume should show Direct Experience in Operating or Managing the type of business that you are starting. If direct experience in operating or managing that type of business is lacking then you should show any operating and management experiences that you have had in your lifetime.

Direct Experience
Direct Experience Operating or Managing your type of business is just that, Experience you have had operating or managing this type of business. If you are opening a fast food restaurant, hopefully you have worked in a fast food restaurant and rose to the management level. This can be in the franchise you are buying, which is the most desirable or in any fast food restaurant. Any type of work in this field is desirable and if you do not have management experience then you could have been close to Management and Learned from the Management that you worked for.

No Direct Experience
The resume focus if you have No Direct Experience is any experience in any business that could be considered management. This can be at your school, church, or any other organization that you had an impact on operations and management.
Examples – You had belonged to a group in school that had some management direction. You could have been involved with your church in some format or another or with your Chamber of Commerce or Rotary Club. Any organization that you can show Management, Sales, and/or Organizational Experience, is a plus and should be talked up as experience for this opportunity.

Existing Business Resume
The Resume for an Existing Business, that is one that has been in business for two years or more is less important. The Bank or Financial Institution will be looking at your business performance over those years. Always include in your resume any New Training in the operations or management of the business. You may even say that you learned by doing in your business with so called ” On the Job Training”. The longer you have been in business the less you need a resume. The Resume is always a good idea to show the bank that you are qualified to operate and manage this business.
 
Resume Structure
Don’t worry about the Format or Structure of your Resume. The key things that you want to address are:
1) Experience or Training
2) Dates of Experience or Training
3) Place or City that Experience or Training occurred
4) Subheading under each Item showing what you learned
5) Remember the less information you have, means that you go further back in time but draw the line at High School unless the experience before that is vital to your business

If the Banker wants to make your loan and thinks that your application is “Thin”, and may not be approved, he may try to bolster that application with any type of experience that you have in the business or management of that business. Try to help him as much as you can by getting the Resume information to him. He will usually use this Resume information “as is ” and copy the resume to his Loan Proposal.

One Important Final Point about Resumes included in a Loan Package. This is not an Employment Resume. What this means is that, since this is not an employment resume, It Will Not Be Scrutinized As Much, IF AT ALL. Be Creative, I’m not saying, Blatantly Lie, but be Creative. We have all had life experiences that can qualify as Experience for Operating and Managing a business so don’t hold back!

You can find contact information and additional information at my website at www.schlueterfinancial.com
 

  

Article by Roger Schlueter, MBA

There are many methods in the valuation of a business. The easiest method would be a Multiple of Sales or Earnings. The trouble with these easy methods of valuing a business is that they are based on a multiple that has nothing to do with that specific business except for the Sales or Income Level. These methods are usually used in industries where the Industry values their businesses that way. Both of these methods can be wrong for many reasons. 

The Sales Multiplier – this form of valuation does not address if the company is making money or not. I’ve seen firms with huge sales but they were losing money at a rapid pace. 

Income or Profit Multiplier – this form of valuation is probably better than a Sales Multiplier but it is based on who decides how high the multiplier will be. I can show you how to manipulate the earnings, so as, to get a higher or lower Net Income or Net Earnings. This manipulation is usually accomplished by manipulating the COGS (Cost of Goods Sold) or the Depreciation. 

My three favorite ways to Value a Business are:
1) The Capitalization Approach
2) The Cash Flow Method
3) The Tangible Assets Method

These three methods for determining the Value of a Business can be better or worse depending upon the type of Business, the Cash Flow of the Business, and the Assets associated with the Business. I feel it is better to use all three methods and then to either pick one, average them, or assign a weighted average to them. I will give an example of each method and then we will try to analyze the different methods. 

Method One – The Capitalized Earnings Approach
This method is based on the average earnings capitalized at the required rate of return on investment. The percent of the rate of return is also the number of years it will take the earnings to payoff in excess earnings. 
Example – $50,000 earnings with a required rate of return on investment of 10%. This will be $50,000 / 0.10 = $500,000. Your Required Rate of Return could be the rate of return of a Government Bond plus the Risk Rate. An example of this would be a 10 year Government Bond paying 5% plus a Risk Rate of 5% added to create your Required Rate of Return. So the Purchase Price would be $500,000 to Purchase an Income Stream for 10 years of $50,000. There are many variations on this method. 

Method Two – The Cash Flow Method
This method is used when trying to determine how big of a loan that the business can support. The Cash Flow is used as an indicator of the company’s ability to service the debt that will be required to purchase the company. Cash Flow is Net Income + Depreciation + Interest = Cash Flow of the Business. 
Example – The Net Income is $50,000, the Depreciation is $10,000, and the Interest is $5,000. The Cash Flow  is $65,000, the rate of interest is 10%, and the Term of the Loan will be 20 years. This is calculated as a Loan with an Interest Rate of 10%, a Term of 240 Payments (20 years), and a Monthly Payment $5,416 (Cash Flow of $65,000 divided by 12 = $5,416 Monthly Payment). This means that a borrower can borrow $561,232 and be able to Service the Debt. 

Method Three – The Tangible Assets Method
This method is based on the Value of the Assets of the Company. 
Example – The Real Estate is worth $500,000 and the Equipment is valued at $50,000. You would need to get the property appraised by a competent Real Estate Appraisor (Most Real Estate Appraisors use three methods of Real Esate Valuation, 1) Market Value, 2) Income approach, and 3) Constructing New).

Looking at our Three Methods of Valuation, we could come to the conclusion that the business is worth at least $500,000 or more, and could Support a Loan of up to $561,232. Just like Real Estate the Business is Really Worth the Amount that Someone is Willing to Pay and the Amount that Someone is Willing to Sell the Business For.

This article was written to give you ideas and possible methods of valuation but remember there are many other methods and many variations of all methods. 

Please go to my Webpage at www.schlueterfinancial.com for Contact Information or other ideas.
                    

Article by Roger Schlueter, MBA

The Bank Foreclosure Sale usually takes place on the County Courthouse Steps. The Event should be witnessed by everyone that is in business and borrows money for Real Estate. In the State of Missouri we have a Deed of Trust that is filed in the county records which serves as the banks lien or mortgage for the property. Before the bank files for Foreclosure, the bank usually gives the borrower every opportunity to come current on the loan or to pay off the loan. The loan will usually be at least ninety days delinquent before the bank will foreclose. The paying off the loan usually entails finding a friendly Buyer that can purchase the property for the Borrower. If there is no progress on making the loan current or paying off the Mortgage then the bank Forecloses on the property. 

The Act of Foreclosure usually entails giving notice though a widely circulated newspaper publication in that county or city. This notice is given by the trustee of the Bank and is notice that the property will be Auctioned off on the Courthouse Steps on a future date and time of day. Notice given is usually between thirty and sixty days.
 
The bank does not want to own the property which entails buying the property from the Trustee and paying off the loan and any fees which will be accumulating. The bank is usually open to sell the property for the amount owed by the borrower plus fees either to the borrower or someone else and may entertain selling the property short, meaning taking less that owed to the bank to payoff the loan.   

The Day of the Sale at the Courthouse the Trustee and any interested parties will meet at a designated spot outside the courthouse. The Trustee (usually an attorney) will read the foreclosure notice and then start the bidding process. Anyone can bid but they must have an amount to put up if they win the bid, usually 10% and then they must deliver the remaining, later in the day, in documented Good Funds. The process is public and everyone bidding provides their name to the trustee handling the bidding process. 

Example: This example is a real foreclosure but the names have been omitted to protect the Bank and Borrower. This loan was a SBA 504 Loan so the bank had a first mortgage and the SBA had a second mortgage. The lenders in this loan thought there was equity in the real estate because the borrower had paid down on the property for ten years. The borrower  would have sold the property but with the Real Estate Market being very poor (July 2011), they could not find a buyer, (the borrower did not even list the property). The SBA thought the property was worth up to $600,000. The borrower owed the bank approximately $220,000 (including all fees) and the SBA was owned approximately $190,000.  

The time of the Sale was twelve noon and the SBA was at the North East Corner of the Courthouse with a Government Treasury Check for the highest amount that they would eventually bid. The bank that had the loan was a small local bank and had a branch within sight about three blocks away. The Trustee and two bankers came walking from the bank branch and were at the Courthouse at five to ten minutes till noon. The trustee asked everyone if they were a bidder and the only bidders were the Bank Employees and the SBA. 

The bidding stated at $25,000 and escalated from there to $100,000 and then to $125,000. The bidding kept going higher until the SBA reached their top amount of $350,000. The increments by this time were in smaller amounts and the bank employees bid $351,000. The SBA did not counter this amount and the bank employees had bought the Building for $351,000. That $351,000 will be divided to pay the bank their $220,000 and the remainder will be given to the SBA in the amount of $131,000. 

Your never really know who is bidding for whom at these things until the Trustee asks for final information. The bank revealed at that time that they were bidding for a Corporation with a different name. The SBA representatives figured that the corporation was a bank entity set up to handle property that the bank owned. A curious individual at the sale decided to check with the Secretary or State to see who the Corporation was. It seems the Corporation was managed by one individual that was president and the only board member, he was the President, Chairman and Owner of the bank. The bank usually bids for itself but they could bid for another entity. You really do not know who is bidding for who until the final bid and then they must say who the entity was that bought the building.
 
Please also see my website at www.schlueterfinancial.com for contact information and additional information.     

Article by Roger Schlueter, MBA

The SPA Form 912, also called the Statement of Personal History is a form that needs to be filled out by all Borrowers and Guarantors of any SBA Loan Application. The Statement asks if the Applicant or Guarantor, have ever been Arrested, Charged, or Convicted of any Criminal Offense other than a minor vehicle violation. This information is then given to the FBI and run through their Criminal History Indices.

It is very important that this form if filled out in it’s entirety and that all questions are are reported accurately. You can download the SPA Form 912 at the following Web Address:
www.sba.gov/sites/default/files/tools_sbf_finasst912.pdf 

The form starts at the top left hand side and asks general questions such as the Name and Address of Applicant (firm name and street address). They ask your Full Name and any other Names Used. The Name and Address of you Bank or Financial Institution, Your Personal Residence Address and how long you have lived at your present residence, and Your Home and Business Telephone. They ask your most resent prior address but this can be omitted if you have lived in your personal residence for ten years or longer. 

The Top Right of the form asks your SPA District Office and your percentage of ownership. the Form then asks you several Personal Questions about your identity and they are:
Social Security Number, Date of Birth, Place of Birth, If you are a U.S. Citizen.

The Form then asks you three questions about any Criminal Arrests or Charges that may be on your record. These three questions are answered by Checking  a Box, Yes or No. These questions are also initialed along with the question on being a Citizen. 

If you answer any of the three questions in the Affirmative then you will have to explain the best you can, the details of the Charge or Conviction. You will probably also have to obtain and Fill Out a Finger Print Card, which will be sent to the FBI along with this form. 

Answering any of these questions ( 7, 8, or 9 ) with a Yes answer will not disqualify you from getting a loan but it will mean that the SBA will have to get information from the FBI and make a decision whether you are Eligible for a SBA Loan. This process can take up to a month or longer to get an answer from SBA so it is best to get this process started as early as possible. 

Never automatically think that you will be turned down for Citizenship or Criminal reasons until the SBA deems you to be Ineligible. 

Please also go to my website at www.schlueterfinancial.com for additional information on lending or my contact information.