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SBA Loan

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I am interested in shopping for SBA Loans with local and regional banks in the near future. Has anyone obtained a loan from the banks and if so what did you use to support your risk factor. If anyone would like to share input on this by public posts or private message I would greatly appreciate input.

Did you have equipment and did they use this as your collateral, at what value, a portion?

Did you have permits in place(county/city use permit, state/federal) or try and get them preemptive of the permits being obtained?

What banks were receptive to this genre of business?

Did you use any SBA Score help?

Thank you for any help, all input is welcome, including pitfalls and warnings you have about your experiences.

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I was successful in getting an SBA Patriot Express Loan, which is a 7(a) type loan. It's a decent program, but I'll ad some thoughts on the loan in general.

I went to a local bank first. I'd researched what I was looking for ($$$), as well as the specific programs while doing my business plan. I included in the cover sheet specifically what I was looking for, and what was being offered as collateral. There were also a few state and city programs doing loans that I included in the total amount of the loan.

Why did I go to a local bank vs an SBA loan guy? That SBA guy will steer you to an SBA loan. The bank, if they like what you have to offer, will look at a few more options. Also, at the end of the day, you'll be going through a bank. Plus, as I'm trying to make and sell a local product, it made sense to me to use a local bank.

The Express loan will charge you prime + 3.25%. Length of the loan is tied to your lease. There will be a fee of 3% of the loan cost that you're paying at the front end. The other loans were a lot less in interest rates (2% total), as well as money available. At the end of the day, I didn't use any of the others though. They had a lot more hoops to jump through.

As I was signing the loan, my banker mentioned that despite there being six microbreweries and a distillery in the area, I was the first they were granting a loan to. When I asked him why, he gave the following reasons:

1. I was putting 1/4 of the total costs in out of my own money. I had skin in the game.

2. I had collateral (my house). SBA may cover up to 75% if it defaults, but they and the bank figure they'll get about $10 back on every $100 of equipment you've bought.

3. I sold myself. Since this is a new business, they want to know how the owner (you) are going to make it a success. Outside of a few areas in the country, this is probably a brand new concept to them.

4. My business plan was at 90% of what they wanted to know, to include all the financial statements (12 month cash flow, P/L to 5 years, Start up expenses, etc) with solid research to back it up. That being said, all that you've got on what you'll sell is at the end of the day is an estimate. That number was pretty low. And, my expenses were all on the high side.

Also, you can frequently get interest only on the loan for the first six months - helps reduce costs while you are building out. You'll need that loan paperwork when you apply for your DSP. I suppose you could have all your build out done, equipment in place, and permits granted, but if you've got all that, do you need a loan? That's the expensive stuff.

Hope it helps.

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Wells Fargo seems to be a big player in the brewing, Distilling, and winemaking space. I attended a program that featured Ninkasi Brewing out of Eugene Oregon that basically said WF was the only bank willing to talk to them and work through the numbers. You might want to contact them.

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I have done multiple SBA loans for various business ventures including the distillery I currently have under construction. You are welcome to PM me for more details.

I went through a SBA facilitator at my local Self-Help Credit union. He assisted in helping me get all my documents together and then helped me shop local banks, since i expressed I would rather deal with a local or small regional lender. He was able to feel lenders out prior to having me meet with them to gauge their interest in this type of loan so there were not a lot of wasted meetings. I wound up with 3 lenders giving me proposals and then I was able to negotiate the best deal from them before deciding on one.

I purchased my building so I was able to do a purchase/construction loan to do al lthe upfit I need. These loans are nice because they can be a 90% value loan based on building appraisal.

I did a second SBA loan on equipment. These are good because they can ammoratize the loan our longer on equipment than usual bank terms and have a great interest rate.

One downside of SBA can be if you want to transfer your loans down the road because you decide you don't like the bank you are with or if you decide you want to pay it off early, there can be substantial penalties.

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