If you have written documents for a presentation and collateral, “start up” loans are done on a regular basis by SBA Lenders.
- A “concept” needs to have these written presenting documents to be “real”:
a) Business Plan
b) Three Years of Projections with underlying Assumptions for how you came up with the Projections
c) In many cases a “Market & Feasibility Study” by a specialist in the field of your “concept” will need to be produced - You will need to know the total amount the “start up” will cost including the dollar amount needed to have the business running until revenue pays the bills
- You will need to pledge collateral for 25% to 50% of the loan amount. This is usually in real estate equity, tangible property equity or in some cases using stocks, bonds, cd’s or cash in savings accounts.
- The SBA Lender will usually require that you have 20% of the project cost given as a “down payment” at closing. This means you will need to show 20% of the project cost in available cash
a) This available cash can come from anyone as a gift
b) You and/or the gifting party will need to show the funds were in an account for three months prior to closing - You will need to show you have the requisite managerial experience in the “concept’s” field of activity
- You will be requested to provide three years of personal tax returns, bank statements, personal financial statement, etc for a full documentation and full underwriting of the loan.