By Neil Hare

The old adage that the time to repair the roof is at sunrise has never been more relevant. Many businesses have seen an improvement in activity over the past few months, but Delta differences are still a concern and there may be another increase in covide issues as the flu season officially unfolds. Since this could lead to new government restrictions, now is the time to consider the debt financing options for your business and find the business capital you may need later.

At the time of the outbreak, you may have found a way to run your business using government grants such as Pay Per Click Protection Program (PPP), Economic Disaster Risk Loan (EIDL), and Restaurant Revitalization Fund (RRF). Or Shuttered Venue Operators Grant (SVOG). However, if those funds are not complete, they will be reduced, and the question, “What’s next?” They may ask.

Although you may not want to get extra debt, this is probably the best option for your business. There are no additional federal support programs on the horizon, and it is difficult to attract fair investors unless your business can be measured quickly. And, while you can attract fair investors, you still need to weaken your ownership of the business you are building. Of course, you have to pay off the debt, but the benefit is that you can control your business and usually have a long time to pay it off.

The first step to getting a loan is to set up your business finance. This means generating profit and loss statements and accounting records, making sure your tax returns are as up-to-date as possible and keeping your books up-to-date so you have a business plan for the future. To use funds. Many small businesses and independent contractors have missed out on opportunities in the past.

Here are three debt consolidation options for your business.

1. Bank loan

Working with a full-service bank still requires business and debt capital. Again, the lessons learned from PPP are not only the identification of strong banking businesses but also the personal relationship with the account manager – they are able to apply for and verify PPP loans very easily and quickly. In addition, businesses with local bank accounts were much better off than national chains.

Banks look at your credit score, business cash flow, past two tax returns and planned cash flows before deciding on loan or online or credit rates, loans and interest rates. In many cases you want to secure a loan from your business assets or in some cases your home. This means that if you open a loan, you will need to sell those properties or your home to repay the loan. It is a good idea to buy the right bank that can offer the best deals.

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Community Development Finance Institutions (CDFIs) are a good option if you live in an economically disadvantaged or inadequate community. CDFIs are banks or credit unions, loans and capital funds, with the goal of expanding economic opportunities for low-income and low-income communities. These loans are readily available, have low interest rates, and come with business development assistance. The damage may take longer than the time of application and receipt of money from the bank or other financial sources.

2. Small business management loan

There are several types of SBA loans:

Economic Disaster Loans (EIDL)

The EIDL program is a traditional SBA program for areas affected by natural disasters such as hurricanes, fires or other unforeseen events. In the case of Cowid, the SBA determined that the entire country was in danger and allowed each business to apply for these loans.

Applying for an EIDL loan is easy and can be done directly through the SBA website at The EIDL loan capital is $ 500,000 and the typical loan is around $ 150,000 and has a repayment period of 30 years. The money is for working capital to cover regular and normal expenses. Due to Kovid, SBA imposed a two-year suspension on the first installment, although interest rates increased. The interest rate on EIDL loans is 3.5%, which is one of the lowest rates you can get. Nonprofits may qualify for IDL loans at a 2.5% interest rate. Covid EIDL loans with the help desk and up to $ 10 per employee, or $ 10,000 per employee, have reduced this amount to $ 1,000, regardless of your worker’s high demand.

Due to the ongoing impact of CVD, EIDL loans are available until December 31, 2021, and if you have already received one, you may be eligible for additional loans. If you are eligible to increase your EIDL loan, SBA will contact you directly for more information and guidance, so wait for that email.

SBA 7 (a) Loans

The most common is the SBA Credit 7 (a) program, which provides short-term and long-term operating capital to repay debts and purchase furniture, appliances and supplies. These loans are very important if the real estate is part of the agreement, for example to buy or build a new building or to renovate an existing building. But it is not necessary.

You will need the same paperwork as you need to apply for a bank loan. This includes personal and business financial statements, such as financial statements and profit and loss statements, tax returns, business licenses and business plans, among other things. Apply for 7 (a) loans through your bank and 85% are guaranteed loans up to $ 150,000 and 75% secured with loans over $ 150,000.

SBA 504 Loans

SBA 504 loans provide “long-term fixed-term financing of up to $ 5 million for major assets” promoting business growth and job creation. ” To qualify for a 504 loan, you must have a business in the United States, have a net worth of less than $ 15 million, and have an annual income of less than $ 5 million in taxes for the past two years. They apply for the loan through certified development centers (CDCs) that are SBA community partners that promote economic development in their communities. CDCs evaluate your business plan, management experience and ability to repay the loan, among other things.

The 504 loans can be used to purchase or renovate existing buildings or land, new facilities or long-term machinery and equipment. They cannot be used for work capital or stock, debt consolidation, repayment, or forecasting or investing in rental real estate. Loans can be repaid in 10-, 20-, or 25-year periods, and interest rates are held for 5- and 10-year U.S. Treasury bonds above the current market interest rate.

3. Small business bonds

SMBX, a new San Francisco-based Fintech financing market, has launched a platform for small and medium businesses to issue bonds to their customers, the community and institutional investors. The company provides free text services to determine how much credit is eligible for a small business, what interest rates and how long it is on the horizon.

The capital raised between $ 25,000 and $ 5 million. Interest rates typically range from 4% to 10% and the time frame is 1-10 years. The SMBX platform offers two features that other credit programs do not offer.

First, if you borrow money from SBA or bank, you will pay the principal and interest to these entities. Other than the loan, it may be of no use to your business. At SMBX, your investors are your customers, and they will receive a notification about your business when they receive their premium and interest payments each month. Similarly, that capital stays in your community. In addition, even though your customers and communities do not have equity in your business because of their bond debt, they are still proud to own additional sales and check rates.

Second, SMBX also offers free transactions around your bond supply. So once your business is listed on the exchange, the SMBX marketing team provides email and social media marketing to your online followers. They provide messaging and creative development and can provide flyers, envelopes or copies of advertisements. In many cases, businesses are finding that trading services are more valuable than borrowing capital.

Get capital for your business before you search

It is highly unlikely that the economy will be completely shut down or at least in most parts of the country. At this point, many restrictions are already in place and many businesses are still recovering from last year. It is very important to avoid low capital in this business environment. Debt settlement (or debt consolidation) may not be attractive, but it is still the best option for small businesses to maintain, grow, and grow.

About the author

Neil Hare is a lawyer and president. GVC Strategies, Where he specializes in small business policy, advocacy and media campaigns; Follow him on Twitter @nehare And on LinkedIn. See more of Nile articles and full biography

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