SBA Small Business Loans with Ray Drew.
SBA Small Business Loans with Ray Drew, Managing Business Development Officer at Fund-Ex, one of the top SBA lenders in the country. Ray shares his knowledge of SBA lending, specifically the SBA 7a loan program, for small business owners and entrepreneurs.
Ray Drew has dedicated his entire professional career to helping small business owners navigate the intricacies of SBA borrowing. His job is to structure a customized loan solution that meets the unique needs of the business and guide the entrepreneur through the process. He is currently Managing Business Development Officer at Fund-Ex, one of the top SBA lenders in the country. You can learn all about SBA lending from Ray on YouTube @SBA_Ray and by listening to his podcast, Story Loans.
Prior to joining Fund-Ex Solutions Group, Ray spent 6 years helping a start-up SBA 7(a) lender grow to one of the top SBA lenders in the country. His specialties include Owner-occupied Commercial Real Estate, Childcare Centers, Franchises, and other Change of Ownership transactions.
Ray was named Emerging SBA Lender of the Year in 2018 and SBA BDO of the Year in 2019 by the SBA industry’s leading trade publication. He currently serves as Chairman of the board for the Florida Association of Government Guaranteed Lenders. On his Podcast, The Art of SBA Lending, Ray likes to say he eats, sleeps, and breathes SBA lending.
Ray lives in Delray Beach, Florida.
- Please introduce the SBA 7(a) loan program.
- 75% of all SBA 7a loans in 2022 went to fund either the acquisition of real estate for a business or the purchase of an existing small business.
- Who should consider an SBA load and what can it be used for?
- It’s more challenging to qualify for an SBA loan if you are starting a new business and don’t have industry experience.
- It may be easier to qualify for SBA lending if you are opening a franchise location.
- What are some common misconceptions SBA lending?
- What types of small businesses typically get approved for SBA funding?
- What is the SBA looking for?
- What are some common mistakes people make when applying for an SBA loan?
- How long does the process usually take (from application to funding)?
- What are some of the key typical terms and conditions of an SBA loan?
- Personal Guarantee and Collateral? This is also referred to as a secured loan. Secured loans are loans that are protected by collateral. This means that when you apply for a secured loan, the lender and the SBA will want you personally pledge assets to back the loan. The SBA lender will then place a lien on that asset until the loan is paid off in full. If you default on the loan, the lender can take the collateral and sell it to cover their losses.
- How much of my own cash do I have to put in? Can I borrow that or receive a gift from a family member?
- You may be able to borrow some of the cash portion if the loan is for more than 15 years, and it may be allowed to be a gift.
- Variable Interest Rates? Current rates?
- Length? Pre-Payment penalties?
- Minimum and maximum loan amounts?
- What should I look for in an SBA lender?
- Where do I start the process of considering an SBA loan? What should I consider first before applying?
- Do I need a business plan?
What is a 7(a) loan? (Source: SBA)
The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:
- Short- and long-term working capital
- Refinance current business debt
- Purchase furniture, fixtures, and supplies
The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.
If you are considering starting, buying or expanding a small business and require external funding then an SBA backed loan may be a great option for you.
NOTE: This is not a commitment to make a loan.
Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of this episode of The How of Business podcast show – dedicated to helping you start, run and grow your small business.
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