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No lender does a real estate loan for a business with 10% down

No lender does a real estate loan for a business with 10% down

So the goal for SBA is to make you a stronger economic force within your community by providing not only money for your business and capital equipment, but now for your next step in life is to own the real estate where your business is located. And that’s what we refer to as to 504 program. And under that program, in general you only have to put down 10% in terms of acquiring real estate. Use the SBA and you can’t get into that building own it with 10% down.

Jon: That’s awesome. No, I think this was really interesting information and I think it’s going to be really helpful. So Julio, I want to thank you again for spending your morning with us-

Jon: …for sharing some of this information and Gene, I think really good information on kind of the programs that are available now as a result of COVID and some of the disaster parameters that are out there. I think in general, though, the core products and the services that SBA offers you can’t say enough about them. And they’re definitely worth looking at, especially if you’re someone who’s thinking that you need a little bit more access or just some support. So for more information, we have our version of SBA, Small Biz Ahead, sba.hartford. We thank everyone for listening. Make sure you rate and review us and subscribe to wherever you do so to your podcast. Let us just know if you like content like this. If you have questions for us or Julio, you know how to reach us. But Julio if folks are local or even national and want to get in touch with you or an SBA office, what’s the best way to find that?

Julio: Best way to communicate with me is email because of COVID, we’re inundated with businesses from around calling us. Reach me at Julio, J-U-L-I-0.casiano, C-A-S-I-A-N- So it’d be And I should be able to return back your email or call you directly to discuss your particular situation.

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So now we have two Economic Injury Disasters what we refer to, or you refer to as EIDL going on now in the state of Connecticut, once for COVID, which was . And as you had mentioned, all these declarations have a beginning and an end. The EIDL COVID-, unless there’s an extension by Congress.

Gene: I think that’s also an enormous benefit and one that a lot of businesses aren’t aware of, because again, it can help free up capital for those businesses, taking an EIDL loan and paying down existing debt. And let’s also not forget that the EIDL loan it’s 3.75% interest, Julio, which is slightly around market rates now, but a lot of my clients are really expecting interest rates to go up over the next year or two. And if you can fix debt at 3.75% for 30 years.

Gene: Yeah, it’s amazing. I mean, you’re trying to get these people to take money that are due to them. Listen, Julio, if there’s any spare change left over near the end of the year, me and Jon are completely fine.

And these guarantees then allow SBA to take that guarantee and then use it to guarantee lenders who will take on the risk of providing the cash. Any lender that’s been approved or sanctioned by SBA to lend, then they would underwrite their loan from anywhere from $10,000 up to 5 million, which is our cap under the 7A. And they could do any type of structured loan. They could do real estate. They could do equipment, working capital using our 7A. payday loans in Brookville OH Usually, what kicks off the difference between a conventional loan at a bank and an SBA loan at a bank is the risk. Do they have the appetite to do that risk? If the lender does not have the appetite to do the risk, they can look at SBA’s guarantee to lessen the risk and take on the borrower. I’ll give you a quick for instance, restaurants. Restaurants are very risky. 75% of them go under in three years. Most of them don’t survive more than three years. Most banks don’t do restaurant lending, unless you have a lot of experience, probably have been with that bank for many years.

Gene: Yeah. If I can just jump in real quick. We like the small business development centers that you mentioned, I know you were making reference to Connecticut because you based in Hartford, but if you’re listening to this, it’s a national program.

Are you really looking at the personal credit history of like an individual and then kind of like ranking that into what might be as a business owner. Is it a completely e? And do you think people get deterred or encouraged based on thoughts around it at all?

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Julio: The lender in their underwriting is the one that’s going to determine the risk. Some lenders in their credit policy might not want to lend to construction company, and all of a sudden, you probably have chaos around the country if that was to happen. And that’s happened in 2008, when I was in the banking environment, construction, restaurants were the first operations that lenders did not want to lend to because while the real estate market was collapsing, restaurants also would’ve followed right through. SBA, when I moved from private sector lending into the SBA, within a year, SBA expanded the guarantee to 90% to allow lenders to take on even lesser risk of an exposure so that they could lend into that. The auto industry almost got ravaged in 2008. SBA went into floor planning, they never did that, allowing also for banks to lend to dealers. Why? Because the major auto industries were pulling away from lending… Not lending, but providing the autos and the cars without some backing of collateral or something like that. SBA came into play big across the country as a result of that.

Julio: Yeah. What’s interesting is that SBA just does not just focus in local initiatives. We have an export program. We invest a lot of money into helping small businesses get into the exporting business. We also have one of our best programs, which people don’t even know is this… And again, the way Congress and government works, everything has a number or a letter. It’s called the 504 loan program. And the 504 is for real estate, is to help you become an owner. We believe that if… Now that you’re an owner of a business, how about wanting to own the real estate in which your business is located in?

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