Leave a comment

Could an SBA Loan Take Your Business to the Next Level?

Raising capital in the various stages of your business can be tricky, time-consuming and frustrating process. Many small businesses need access to low-cost, long-term financing but have a difficult time getting banks to work with them. The Small Business Administration (SBA) exists for this reason.

So could a SBA loan help your business? Perhaps.

A 2014 Forbes article praised SBA loans for providing affordable financing to small businesses. However, the downside is that the process of getting SBA financing is highly document intensive and potentially time consuming. This didn’t stop the 14,718 businesses that utilized the 7A program (a loan less than $5 million) in the fiscal year of 2015. Due to the complexity in getting these loans, many companies used SBA Loan Packaging Firms to help them with the process. The SBA doesn’t actually make direct loans, according to a an article in Entrepreneur, but rather provide a loan guarantee to entrepreneurs, backing 75 percent of your loan if you ever default on your loan.

A small business by SBA standards is any business that makes less than $5 million a year after tax profit. There are 28 million small businesses in America that account for 54 percent of all U.S. sales. As a small business owner you provide 55 percent of all jobs and 66 percent of all net new jobs since the 1970s. Franchised small businesses in the U.S. account for 40 percent of all retail sales and provide jobs for some 8 million people. The small business sector as a whole occupies 30-50 percent of all commercial space, an estimated 20-34 billion square feet.

By guaranteeing to the bank 75 percent of your loan, the SBA fosters small businesses’ long-term success. It recognizes the role small businesses play in the national economy and aim to “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation,” as the Small Business Association succinctly put it in their mission statement.

Before SBA was founded by Congress in 1953 and even today, it could be tricky for a young company to obtain the kind of capital needed not just to start a company, but also to grow their business. The federal government realized the important role small businesses play on a national level both by job creation and the fostering of innovation. They serve as building blocks for the national economy and are a key component of the local economy.

As a business owner, forecasting growth is key, if you want to take your business to the next level. Planning and preparing for events in the future and taking financial risk can yield sizable returns. The ability to invest money in your company to grow is key, and often neglected, can be a significant piece to reach of the puzzle to reach your growth goals. However, it takes time, money and preparation, all resources small businesses might not have.

Loan packagers, such as SBA Loan Group, could make the process significantly easier for a small business. Through SBA Loan Group you can borrow money on a low interest rate (less than 6.25 percent) and pay it down over a long time period (10-25 years).

We would first look at your tax returns and financials and make sure that you qualify for an SBA loan. Then we would gather all the data needed for a loan, pre-underwrite the data to make sure it meets SBA requirements, prepare and file your application with one or more banks that we work with. We will then obtain a letter of intent, and assist you in finalizing and funding the loan. We are then paid a success fee at the closing of the loan.

Since the government backs the program, the process can be relatively complicated and require significant documentation, which means it can take 8-12 weeks before you actually get the loan. Although, most banks today do require personal guarantees for business loans, all SBA loans requires personal guarantee from any individual who owns more than 20 percent of the borrowing company.

There are two types of SBA loans 7(a) and 504. The 7(a) loan can be used towards all legitimate purposes that relates to building a business. For example, working capital, purchasing inventory, acquisitions, sales and marketing, hiring personnel, purchase of real estate for the use of your business and all other general purposes. A 7(a) can be for up to 5 million dollars. The other program within the SBA, 504, is specifically for purchasing real estate and /or alterations to the real estate, these loans can be for up to 14 million dollars. When purchasing real estate, both 7(a) and 504, only require only 10% down.

If you are interested in finding out more please click this link to fill out the short form and we will contact you or feel free to call us at (646) 699-1344 any time.

TJHeadshotTonje Gjorven
Loan Manager
SBA Loan Group
New York, N.Y.


Editor’s Note: Other Financial Planning Association content that might be of interest to you includes: 

Leave a comment

The Power of the In-Home Meeting

In my blog, and its companion Journal of Financial Planning article titled, “How to Deliver Empathetic Service and Gain Client Loyalty,” it’s emphasized that a client transforms from a revenue stream to an asset in the presence of loyalty. Each loyal client that tells others of his or her experience with an adviser’s service package represents a vine of fruitful relationships.

The common thought is loyalty begins after the planning and investment solution is executed, service experiences occur, and benefits result. In fact, client loyalty can begin during the sales process.

Bringing Balance to a Fledging Relationship
A relationship has a greater chance of success when there is balance between the two parties. Unfortunately, a wealth management relationship is inherently imbalanced because the prospect is asked to divulge private financial, family and personal details while the adviser is not expected to reciprocate.

The typical meeting in which the prospect sits across a table from the adviser (or worse on the other side of a desk) introduces unnecessary barriers to making the fact-finding process more free flowing. An in-home meeting strips these barriers away.

A Powerful Tandem
An advisory firm’s marketing program reaches a higher ROI by increasing the sales yield from one funnel stage to another. My last blog suggests that during the interest-qualifying stage, the adviser prepares a tailored education presentation (free of charge) for the client’s number one identified need, anxiety, or aspiration. (Note: the recently released FPA/LinkedIn study “Financial Professionals and the Future of Thought Leadership and Social Media” confirms how important education is to clients: 76 percent of respondents rate it “Somewhat Important” to “Critical”.) This allows the prospect to “test drive” the adviser’s services and measurably de-risk the impending relationship decision.

Taking this one step further, conducting this “test drive” in the prospect’s home significantly increases the yield in turning a prospect into a client. This combination sparks client loyalty.

The Real Productivity Measure
An adviser may view an in-home meeting as an inefficient marketing step given the overhead of driving to and from the prospect’s residence. While this meeting takes, say, three times as long to conduct from beginning to end compared to one where the prospect comes to the adviser’s office, this is a misplaced analysis.

The marketing plan’s ROI should be measured on the time it takes a lead entering the funnel to becoming a client. Using this more realistic business measure, an in-home meeting often dramatically decreases the time to a successful close.

Prospects appreciate the increased effort to come to their home and it conveys important messages such as: “I’m valued as a person not just as a business transaction,” and “My needs and anxieties merit this attention.”

Visiting a home is also a treasure trove of information for an adviser:

  • Neighborhood demographics
  • Family lifestyle
  • Family structure
  • Family interactions
  • Hobbies and collections

Keys for Successful In-Home Meetings

  1. Standardize the structure. Formulate a workflow process for conducting the meeting such as a pre-meeting mailing, an agenda, a presentation leave-behind and a checklist of next steps.
  1. Make the offer. For some people, an in-home visit pushes privacy concerns. If there’s reluctance, explain the meeting’s purpose, particularly the decision at hand (for example, “You’re entrusting your wealth and peace of mind to me, and I want you to be as comfortable as possible”). Highlight that it is a standing offer for any future meeting.
  1. Remove the hosting stress. The meeting’s purpose is to provide education on the prospect’s top need or concern and not about creating stress for the meeting itself. Offer to bring refreshments such as coffee plus baked goods if your meeting is in the morning, a light snack if your meeting is in the afternoon, or dessert if your meeting is in the evening.
  1. Meeting precision. Conducting the meeting with precision conveys the value of your prospect’s time. This means being on time, managing to the agenda and having organized materials.

It’s a Relationship!
While financial services is the content, what’s actually being bought and sold is a relationship (see my blog post titled “Your Product is You”). Face-to-face meetings are critical components of due diligence. For the prospect, this involves the adviser’s personal presentation, relatability, trust, care and concern. These core decision criteria come alive when an adviser invests his or her time in a meeting at the prospect’s home.

A prospect contemplates a substantial financial commitment when seeking an investment relationship—for a high-net worth family, this will be thousands of dollars per year. Taking the time to meet in a prospect’s home expresses appreciation for this opportunity and shines light on the adviser’s service role.

Kirk LouryKirk Loury
Wealth Planning Consulting Inc.
Princeton Junction, New Jersey

1 Comment

Managing the Business Development Process: A Key to the True Ensemble

According to a recent report by Cerulli Associates, financial advisers today are more likely to join an established RIA than to create their own advisory firm. Another study by InvestmentNews came to the same conclusion. Are these results surprising? Perhaps for some, but the talk regarding the emergence of ensemble firms has been around for more than a decade. Whether due to aging founder advisers who want their firms to continue after they’re gone, or to advisers who want to grow the top line, there is indeed a hiring frenzy by existing firms.

What happens after the frenzy has been satisfied and additional advisers are in place is another story. Unfortunately, “buyer’s remorse” can sometimes set in: Firm leaders who have failed to anticipate and prepare for the changes resulting from having additional advisers in the firm cannot achieve the intended results. So, what can be done to prevent this scenario?

As the leader of your organization, you should, of course, carefully craft the vision and business plan—and then drive that plan into reality. But one key to forming a true ensemble is the need to manage the business development process—sometimes referred to as the sales process.

Manage the Process
As advisers join your firm, they will need leadership and management to help them grow. You may find that it doesn’t cut it to go back to “business as usual” and focus your time as a financial adviser on only serving your clients. Be it loosely or with formality—and whether or not you call it “sales”—the business development process within a firm needs to be managed. To do this, consider the following:

  • Have individual advisers set revenue goals. This will yield the forecast on which future expenditures of the firm can be based. At least some of these expenditures should be for marketing efforts designed to gain new clients.
  • Track all activities. It is all too easy to service existing clients endlessly and never get around to prospecting. Keeping track of advisers’ revenue-generating activity will help provide some needed structure and balance to client-servicing activities.
  • Coordinate marketing events. This will ensure that firm-sponsored events and expenditures are embraced by all advisers within a firm.
  • Recognize success. Advisers need to be recognized for their achievements, as well as coached in areas where improvement is needed.
  • Evaluate techniques. By evaluating the effectiveness of different revenue-generating approaches, future time and energy can go into those prospecting activities with the highest return on investment. This is often referred to as tracking and assessing the effectiveness of endeavors of the sales funnel.

A Word to the Wise
If you love being a financial adviser and working directly with your clients but hate managing others and/or focusing on others’ growth, you might want to “stick to your knitting” and remain in a solo practice. And if you think that growing your business is as simple as finding another adviser to join your firm, think again. All work is a process—including business development.

Remember, you might establish a multi-adviser firm by hiring more advisers. But a key to forming a true ensemble includes actively managing your business development process.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.