Financing For Shipping Franchises
With the economy showing early signs of recovery, now is a good time to consider small business ownership, including shipping franchises. But getting financing requires a little more legwork and information than it used to.
SBA-guaranteed loans are a common form of financing in shipping franchises, available from many banks, including your local, community bank.
Our shipping franchises meet the basic requirements of SBA-backed loans:
- Must be operated as a for-profit entity.
- Must be organized as a sole proprietorship, corporation or partnership (including LLP's and LLC's).
- Does business within the U.S. or its possessions
- For retail businesses up to $21.5 million in annual sales
The loan terms are defined by the use of funds:
- Building Improvments = 25 years
- Leasehold Improvements = 10 years
- Machinery & Equipment = 10-20 years
- Inventory = 7 years
- Working Capital = 7 years
Many SBA loans use the assets purchased with the proceeds of the loan as collateral for the loans.
However, SBA requirements can also include the owner to:
- have at least 20% equity in the business from personal savings,
- family loans and other non-bank sources;
- possess an accetable, good personal credit history;
- pledge personal assets as collateral for the loan.
Terms vary by lender and by loan, so borrowers should consult their local bank for more details.
Just last week, President Obama asked Congress to send him legislation that would lower the cost of funds to banks from 5% to 3% for those that submit a small business lending plan. In harder-hit communities experiencing higher job-loss or underserved rural and urban areas, Obama is asking for an ever lower 2% cost-of-funds rate.
These moves are intended to loosen the capital markets and encourage lending for small business creation.
So whether you're evaluating shipping franchises or another business concept, it appears the growth of small business is now on the radar of the Obama Administration.
(Note: credit for some material in this post to California Bank & Trust in San Diego, CA)