Restaurant loans and programs of the SBA

Examining options for a loan restaurant? Due to the current credit crisis you might want to look at the SBA's programs in the first place, as is currently the most reliable programs. Not only have the highest probability of closing, which also boasts some of the lowest rates, the highest leverage, longer fixed-rate financing and around the restaurants.

Rates now, for restaurants, are in s 6% 'low 7% depending on the particular contract. Combine that with 90% to 85% financing, which means that just to get out of the pocket 10 to 15%, it is easy to see the benefits of such programs. Compare that to traditional bank financing, the rates are about the same, but you will get out of the pocket 30 -40% down. On refinance loan values ​​are very conservative with the banks at 60 to 65%. While the SBA can go up to 80% on refinances restaurants.

In terms of fixed rates that depend on the structure of the loan. With the SBA 504 you can easily get 10 year fixed, 25 year amortization loans. With the seventh most SBA are floating if we have a program that is fixed for 5 years and amortized over 25 years. Once again, as a comparison of financing bank does not exceed a fixed 3 -5 years and often have no plans of amortization over 20 years.

In fact, if the loan amount is below $ 2,000,000 you can find that the 7th has more benefits for you than the 504. Like the ability to restore the working capital, capital rehabilitation for the subject property and debt consolidation for business expenses. Moreover, the seventh offering some of the more lenient underwriting in the mortgage business. For example, credit scores can be as low as 500. Moreover, the coverage rate of the debt can be as low as 1.1, that in a cash business like restaurants can be the difference between a loan canceled or closed.

Also with regard to test the cash flow of the business, you are allowed to use the projections of business and ... This is a huge step. Tell your historical financial data (income statement) does not provide enough cash flow to cover the proposed loan. With 99% of lenders out there who would die in water. However, with the projections 7a is possible to use to cover the difference.

This leads to an important point. The programs of the SBA can provide great flexibility, but keep in mind that not all lenders are the same. So if you have been refused by a bank that offers SBA loans, does not mean you are not eligible for SBA financing, means only that the bank did not like the transaction. At the end of the day the bank is still on the hook for the loan and the banks' appetite for deals and guidelines vary widely. And the way they structure the bank loans vary as well. For example, 99% of banks offering the seventh as a variable rate. However, we have access to a fixed program of 5 years the 7th .......