The Situation: Franchise Start-Up
Two business partners are starting a family entertainment center, a start-up franchise location, and they have more than 20 years of local industry experience between them. The franchise has a proven business model and a track record of success in a thriving industry.
- Limited Collateral
The owners do not have enough tangible assets to qualify for a conventional business loan. They were rejected by three banks and were losing hope of making the dream a reality.
The Solution: Specialty Finance SBA Loan
First Business Bank offers a complete toolbox of funding solutions to meet business owners’ unique needs. For this situation, an SBA loan was a perfect fit. Guaranteed by the U.S. Small Business Administration, SBA loans are an alternative to traditional bank loans, designed to help people starting up or growing a business who may not meet traditional lending standards.
- No Collateral Barrier
Many conventional lenders won’t lend to owners in business situations where there’s a lack of assets to recoup if there’s a default on the loan. In this case, the owners invested some equity.
- Start-Up Business Bias Removed
A new business with no previous history of profitability is sometimes too risky to qualify for conventional loans. Projected cash flow for this business is adequate for an SBA loan in this case.
- 10-Year Full Amortization
This SBA loan features consistent payments over 10 years with no larger-than-typical balloon payment required that’s often necessary with a conventional loan.