April 19, 2014

Lending

Treasure Hunt

Rising interest rates, bank consolidation and the recent demise of the SBA's popular LowDoc loan program are making it tougher for entrepreneurs to find financing.

Barbara Miracle | 3/1/2006

Rising interest rates, bank consolidation and the recent demise of the SBA's popular LowDoc loan program are making it tougher for entrepreneurs to find financing. Here are three tips.

Think home equity

Putting your home on the line may sound risky, but it is often the easiest way to get tens of thousands of dollars. There's minimal paperwork and, with Florida's hot home market, often plenty of equity available. A home equity loan makes more sense in light of an SBA loan requirement that if the borrower has 20% equity in his or her home, it must be used as collateral for an SBA loan. So in many cases, the entrepreneur's home would be pledged anyway to get the SBA loan, which requires more paperwork and often higher fees.

Look for an investor

There are no listings and few databases for private investors, but Jim Parrish, a financial counselor with the University of South Florida Small Business Development Center, recommends talking with friends and business associates, industry insiders in your specific field and "true believers" in what you are doing. As an example, he says someone starting an environmental business might join the Sierra Club to meet and mingle with like-minded people with money. "There's a huge opportunity here," he says.

Go beyond banks

Some credit unions are starting to do SBA lending. SBA loans at any institution, however, are not as easy to obtain now. Borrowers must use SBAExpress or traditional 7(a) loans. The problem is that the 7(a) loan process is time-consuming and pricey. SBAExpress loans, which have a government guarantee for only 50% of the loan, are only offered at a limited number of financial institutions.

Tags: Florida Small Business, Banking & Finance, Entrepreneur

Florida Business News

Florida Trend Video Pick -

Central Florida's bike trails paved with adventure
Central Florida's bike trails paved with adventure

Ride along on a tour of the Cross Seminole Trail, which runs from Oviedo to Longwood.

Earlier Videos | Viewpoints@FloridaTrend

Ballot Box

Amazon will begin charging Florida residents sales tax on May 1, 2014. How will this affect your online shopping at Amazon?

  • I will buy less from Amazon
  • This won't change my Amazon shopping
  • I don't shop at Amazon

See Results

Ballot Box
Subscribe