Lending environment has gone through a dramatic change

Less money and it has become harder to access that money

Forced to find other ways to fund a business

WHERE THE LENDING WORLD IS TODAY

The U.S. is experiencing a $100 billion small business credit gap.

Since the recession, small business lending and small dollar lending have shrunk dramatically – 14.7% and 17.9%, respectively.

While SBA total lending dollars may be up, the number of loans is down 16%.

TIGHT CREDIT IS A NATIONAL PROBLEM

SBA LENDING HAS FOCUSED ON LARGER LOANS

Ask family

SO NOW WHAT ???

Ask family

Win the lottery

SO NOW WHAT ???

Ask family

Win the lottery

Go to a loan shark

SO NOW WHAT ???

SBA Loans401(k)/IRA Rollover FundingEquipment LeasingSecurities Backed Loans

OTHER TYPES OF FUNDING

Most common for business start-ups and existing businessesMaximum loan amount raised from 2 million dollars to 5 million dollarsCurrently, the maximum rate is 6%Typical loan amount is from $100k to $2 MillionLoan can take 30 to 60 days

THE SBA 7A LOAN PROGRAM

Funding Start Up Costs of New Business

Construction of a New Building

Refinance of Business Debt

Purchase of an Existing Business

Working Capital

Purchase of Commercial Real Estate

Tenant Improvements

Equipment Financing

Inventory

WHAT THE 7A LOAN PROGRAM IS USED FOR

Strong personal credit

Industry experience of 2 years

May need to provide collateral

Usually 20% to 30% down

Written Business Plan

Provide 3 years of tax returns

Personal financial statement

A Resume

7A LOAN PROGRAM ELIGIBILITY REQUIREMENTS

Less common than 7A LoansSome key differences:

The business loan must include real-estate or equipmentThe bank takes a first mortgage of 50%You typically put down 10%

Most 504 projects are in the $200k to $5 million plus range Longer terms/amortizations are availableThe SBA guarantees 40%

SBA 504 LOAN PROGRAM

Designed to increase the number of loans under $350K

Replaces the Community Express Loan

Guarantee: 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000.

THE SBA SLA LOAN PROGRAM

One of the more popular funding strategies to purchase a new business

10% of the franchises sold in the U.S. utilized retirement plan rollovers as part of the funding

Why was this created? How does this work? What are the benefits?

401 (K) - IRA ROLLOVER FUNDING

1974 Congress creates IRA’s allowing Americans to save for their retirement tax deferred

1980 401(k)’s were established increasing the amount Americans could save tax deferred

Most Americans have the bulk of their savings in their Retirement Plan

Withdrawal of savings incurs taxes and penalties

WHY RETIREMENT PLAN FUNDING IS NEEDED

Here is an example of the tax implications for someone withdrawing $200,000 from their retirement plan

10% early withdrawal penalty

30% state and federal taxes

Leaves the individual with $120,000 of the $200,000

WHAT IF I WANT TO WITHDRAW THE MONEY ?

Roth IRAs do not qualify – Most Employers require employment termination prior to using retirement funds.

*Other plans may qualify

401(k) Plans407 Plans (Government agencies)Cash Balance PlansEmployee Stock OwnershipMoney Purchase PlansSEPs

403(b) PlansAnnuity PlansDefined Benefits PlansIRAsRollover PlansSIMPLE Plans

TYPES OF PLANS THAT QUALIFY

Establish a corporation with a customized retirement plan

Rollover your current plan into new corporation's plan

Your new plan purchases stock in new corporation

Your new corporation now has the capital to start

HOW IT WORKS

No Loan paymentsCurrent credit score not a factorDoes not affect one’s debt ratio or credit ratingCan be used as capital injection for SBA

Saves moneyBuilds wealthReduces emotional and financial concernsCan take a salary

WHAT ARE THE BENEFITS ?

Uses your current investment portfolio as collateral for a loan

Investments Remain in your name

Interest rate, currently around 4%

Usually lower than an SBA or Home Equity Loan

Keep all the appreciation and dividends from your portfolio

You are borrowing money at say 4% and earning 9% on your investments

Borrow approximately 70% of the value of your equity portfolio and as much as 80% of a fixed income or bond portfolio

SECURITIES BACKED LINES OF CREDIT

Cash flowAssets may include:

Office FurnitureComputer equipmentCompany vehiclesPrinters Fitness Equipment

EQUIPMENT LEASING

If you’re contemplating purchasing a product whose technology and capabilities could quickly become obsolete, leasing may be a better, option.

Some advantages to leasing:100% financingNo down paymentsCash flowPotential tax advantagesUp to $90K for start-ups

Many different ways to get the funding you needWe have almost 30 years of experience helping visionary

entrepreneurs launch their dreams!

It’s always been part of the American Dream to

own your own business

Please contact us at Benetrends.com