Franchising USA - November 2014

Page 64

ex per t advice

Eric Schechterman, Director of Sales and Marketing, Benetrends

Dispelling Current Myths in Franchise Funding As the economic effects of the recession begin to fade, there has been a recent resurgence in interest for Small Business Administration (SBA) loans. Along with this growth, however, there have also been increased occurrences of lenders making boastful claims that may sound a bit too good to be true.

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Indeed, oftentimes they are too good to be true, but unfortunately you may not find out the real truth until after you’ve signed on the dotted line, and by then it’s usually too late. To help clear up any confusion and arm you with the facts you need before you make a commitment, here are the truthful responses to five top SBA loan myths that are making the rounds today.

Myth #1 There’s an SBA loan available that does not require any collateral.

Fact: This is false, and the myth was probably based on the fact that there actually is a loan available to every lender that doesn’t require personal collateral. However, the fact that’s being conveniently omitted is that business collateral is still required, and the amount could be significant. Although there are a small number of banks that may only require a minimum of 10 percent collateral, most still prefer 20-30 percent. The SBA website clearly states that for all SBA loans, personal guaranties are required from every owner


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