Consumersadvocate.org has a great article that discusses the 3 types of small business lenders and then analyzes their top picks for online lenders.
SBA-Backed Loans are considered the safest type of small business loans since they are government-backed. The SBA provides a guarantee of up to 85% for loans under $150,000 and 75% for loans over $150,000. This reduces the risk for lenders and raises the borrower’s chances of getting approved for lower interest rates and longer repayment terms. These loans can be very hard to get approved.
Brick-and-Mortar Lenders generally have the lowest interest rates. They do have more strict qualifications regarding a business’ credit score, time in business, and annual revenue. The funding time is often longer.
Online Lenders offer a simpler application system. They fund the loan itself, usually with an underwriting financial institution that backs the loan. Their interest rates may be higher. Some online lenders do offer SBA-backed loans.
Read the following article: Best Small Business Loans Based on In-Depth Reviews to see consumersadvocate.org’s top 13 online lenders (after researching dozens of lenders) and the types of loans that these lenders serve:
*Line of Credit
*Accounts Receivable Financing
*Merchant Cash Advance
Once a business owner decides the type of loan that they will need, it is best to write out a business plan or loan proposal and review your credit score and history before you select lenders that you want to approach.
Consumersadvocate.org recommends that you always compare a minimum of 3 different lenders to get the best loan offer. Besides looking at the loan offer’s interest rate, look at the origination fee, factor rates, guarantee fee, underwriting fee and application fee.
This article is full of great information regarding types of lenders, types of loans and research on many online lenders that is invaluable for the small business owner!
Commissioned Salespeople/Business Sales.
Emerald Coast Business Intermediaries is providing a new level of service for those looking to sell and buy businesses on the Florida and Alabama Gulf Coast and throughout South Alabama and the Florida panhandle area. We work both Main Street and Lower Middle Market M&A Deals. Those selected for career training should be located within two hours of our Destin, Florida corporate office, and must have, or be able to quickly obtain a Florida or Alabama real estate sales license. Training will be a combination of live, online and follow up mentoring from our manager/broker with 25 years of experience. He is one of 2 Certified Business Intermediaries in our market. The next closest ones are in New Orleans and Jacksonville.
Helping people sell their business (and getting paid very well to do it)….
Helping people sell and buy businesses is a REAL career with the opportunity for unlimited income. With millions of baby boomers approaching retirement age, the United States is in the initial stage of what is expected to be the greatest wave of business transitions in American history. This is creating a growing demand for dedicated, professional business intermediaries.
Intermediary positions are available for mature professionals willing to learn the exciting and challenging field of business sales, mergers and acquisitions.
ECBI Team members are provided with superior training, an attractive compensation schedule, strong administrative support and extraordinary opportunities to reap the rewards of a professional financial career.
When selecting new members for our team (and we are very team oriented), we look for the traditional indicators of successful business intermediaries:
- Maturity- at least 5 years of business experience
- Initiative- a well-organized, well-planned self-starter
- Creativity- development of solutions for complex business problems
- Selling experience- prospecting for, qualifying and closing customers and sales
- Business management or ownership- past entrepreneurial and management experience a plus
- Education- college degree strongly preferred.
- Background- management or financial consulting, or commercial/industrial real estate may be a plus.
No prior experience in mergers or business brokerage is required. The ECBI Team offers the resources and training to help our intermediaries succeed in what is for many a very lucrative career.
No phone calls please. Please reply with resume to HR@ecbrokers.com
The Federal Reserve announced their new “sweeter” loan terms for Main Street Lending on June 8. This program will support up to $600 billion in new loans. A business that applies must show that it was in “good order” before the Covid-19 pandemic. Even if business owners received PPP loans, they are able to apply for these programs. The Fed will still support 3 lending facilities (one for new borrowers, a 2nd for borrowers that may have existing debt but lower fiscal needs, and the 3rd for borrowers with an existing loan/credit line with outsize fiscal needs). The Federal Reserve chair, Jerome H. Powell, wants to support small and midsize businesses as they reopen and rehire workers to aid America’s broad-based economic recovery.
The following are some of the new important changes to the Main Street Lending Program.
*Increased maximum loan size: Banks can now lend up to $35M or $50M in new loans. Up to $300M can be refinanced from an existing loan if a business’s total debt is below the threshold established from 2019 earnings. A business needs a minimum EBITDA of just under $42,000 from 2019 and no debt.
*Lowered minimum loan amounts: Minimum loan is now $250,000 (down from $500K) for 2 programs. The 3rd program has loans that begin at $10M.
*Repayment period is extended to 5 years (from 4 years). There will be 1 year with no interest and new rules will allow up to 2 years of deferred payments. Repayment terms will be standard across all 3 facilities.
*The Fed’s participation is raised to 95% for all loans and banks will only have 5% of a loan’s value on their books.
Main Street Loans also restrict executive compensation and businesses need to make every effort to retain their employees during the term of the loan. The Main Street Lending Program is funded with $75 billion in aid from the CARES Act.
The new loan terms will allow more creditworthy small and midsize businesses to receive funds to survive the pandemic challenges. This is great news for America’s businesses and will allow them to remain the backbone of America.
For more information:
One of the webinars from Business Brokerage Press on May 7, 2020 was Structuring Transactions Post-Coronavirus — COVID-19 Virtual Roundtable. https://www.axial.net/forum/structuring-transactions-post-coronavirus-covid-19-virtual-roundtable/
The roundtable was led by Axial CEO, Peter Lehrman, and included 10 middle market deal professionals. Kristina Mayne, Director of Events for Axial, has written up notes from the webinar.
Here are a few questions and answers from the panel regarding virtual due diligence that are helpful for business sellers and buyers.
How are perspectives on virtual diligence evolving?
- It can be challenging but you can still check the four C’s of credit (capacity, character, collateral, cash flow) in a virtual environment.
- It comes back to knowing the sponsor and spending enough time with management on the phone or video call and expanding your breadth of contact — you can still validate integrity in an old school way through a virtual format. Background checks are also imperative.
How much diligence can be done virtually? Will you close a deal without meeting in person?
- In person is critical — won’t submit any bid without meeting the management team several times.
- Will perform diligence but not close without multiple in-person meetings. The assumption when submitting LOIs is that there will be multiple visits in person in June or July. Sitting across the table is a key part of relationship building and making sure everyone is aligned.
- Sellers are offering virtual tours of plants in order to try to get deals done.
- Most are assuming that it will be weeks before travel opens up, and counting on that to be able to get deals done.
- It’s all about relationships right now — going back to people you know who you’ve worked with before rather than entertaining new vendors.
New standards for environmental health and safety due diligence post-COVID
- SRP Environmental (an environmental, health and safety consultant) is being brought in to verify that manufacturing facilities are providing training and doing deep industrial cleaning for COVID. This has held up deals.
- This work has replaced a lot of work they historically did in the oil and gas space.
- This work will be a fundamental addition to due diligence for buyers of manufacturing facilities; also doing the work for office buildings, stadiums, and other facilities as everyone looks to open the economy. All the work has to be done on site.
Jeff Moody, CBI and managing intermediary for ECBI had this to add:
“While we have seen that many things can be accomplished virtually, the nature of a business transfer will require several in-person meetings. It is not like buying something online.”
Women-owned businesses have had a major impact on the U.S. economic recovery since the recession of 2007 – 2009. A report from Womanable and American Express OPEN’s 2016 State of Women-Owned Businesses shows that there have been 1,072 net women-owned businesses started each day in the U.S. since 2007. Women-owned businesses have grown at a rate that is five times the national average for the last 9 years (9% increase of total businesses vs. 45% of women-owned businesses). Florida ranks first among the top 10 states to show the quickest rate of growth in women-owned businesses!
Additional information can be found in the article by Heidi Travis:
Many know that Walton County is the fastest growing county in Florida right now. What many people may not know is that the rural area of Freeport could become the hotspot of Walton County. State Rep. Brad Drake, state Senator George Gainer and Freeport Mayor Russ Barley have discussed the town’s future and believe that the area could nearly triple in size in 10 years from 6,000 to 15,000.
In the article “Officials Foresee Economic Boom in Freeport”, Rep. Drake says, “South Walton is a very attractive choice because of the beaches, and Freeport is equally as attractive with the pristine waterways, the Choctawhatchee Bay and all the special tributaries that we have that make our area uniquely beautiful.” Many South Walton visitors learn about the area when they travel through the gateway of Freeport on the newly expanded 4 lanes of Hwy. 331.
Freeport’s master-planned community of Hammock Bay continues to grow. They house almost 4,000 of Freeport’s 6,000 residents. The development of three new subdivisions and an apartment complex are also underway. Several national stores and restaurants have opened in Freeport in the last 2 years. Freeport’s infrastructure is also growing and improving. Freeport is upgrading its wastewater treatment plant with 14 million dollars in grant money. The future definitely looks bright for Freeport and Walton County.
For more information, read the article by Nathan Cobb.
If you are a business owner and you are considering selling your business, what are you looking for in a business intermediary? Interview your candidates and have them walk you through their process and approach. Ask about their experience in selling businesses, and about the businesses in your industry. How do they target the buyers for your business? Will you be comfortable working through the marketing and due diligence process with them?
When selling your business consider who will be answering the following questions that Brent Beshore asks in his article, “Should You Hire an M&A Advisor to Sell Your Business?”
- Who will source and vet potential buyers? (phone calls, buyer/seller meetings & site visits)
- Who will gather the history of my business including detailed financials, customer and vendor contracts, employment and real estate agreements and legal actions.
- Who will negotiate the deal? (the letter of intent, due diligence and final paperwork.)
- Who will keep me emotionally in check during this whole process?
- Who will be proactively pushing the deal forward on my side?
If you’ve never completed a transaction like this from the selling side, you might want to consider engaging an experienced and knowledgeable intermediary. Emerald Coast Business Intermediaries would like to sit down and discuss an exit strategy with you.
For more information, click on the following article:
Should You Hire an M&A Advisor to Sell Your Business?