How to Open & Operate a Financially Successful Herb and Herbal Plant Business by Kristie Lorette

Author:Kristie Lorette
Language: eng
Format: epub
Tags: herbal, plant, business, herbs, basics, business structure, operations
Publisher: Atlantic Publishing Group Inc.
Published: 2012-04-12T04:00:00+00:00

Basic 7(a) Loan Program

This is SBA’s primary business-loan program. Although its maximum allowable loan is $2 million, it is the SBA’s most flexible program in its terms and eligibility requirements and is designed to accommodate a wide variety of financing needs. Most of these loans are given to serve functions, such as working capital, machinery, equipment, furniture, renovation, new construction, and debt refinancing. Commercial lenders are the ones who actually make the loans and determine who they will loan to, but the government offers a guarantee for a percentage of the loan should the borrower default or fail to meet the terms of the loan. For this particular loan program, the government can guarantee up to 75 percent of the total loan made to the business if it exceeds $150,000 and 85 percent for loans less than $150,000.

The most attractive features of the 7(a) are its low down payment, low interest rates, and an extended loan maturity for as many as ten years for working capital and 25 years for fixed assets. These are great perks. If you want to start an early payoff, a small percentage of the prepayment amount will be charged as a prepayment fee. The early payoff can come in handy when a business is experiencing fast growth and needs to refinance in order to support its expansion, and the small fee required to do this may be more than worth its while.

Microloan Program

This short-term loan offers small loans up to $35,000 to small businesses starting up or growing. Funds are made available to intermediary lenders who are nonprofit and community-based, and these lenders typically require some form of collateral for the loan. The loan can be used as working capital to fund the operations, to purchase inventory, supplies, and equipment in order to do business, or to buy furniture and fixtures for the business. For example, an herb business would use a microloan to purchase herbs for inventory, tables to display herbs, equipment for watering, soil, and pots to sell. There are intermediaries available in most states, the District of Columbia, and Puerto Rico. The states where there is no intermediary include Alaska, Rhode Island, Utah, and West Virginia; Rhode Island and a section of West Virginia are currently accessing intermediaries in neighboring states.

Prequalification Pilot Loan Program

This program allows for a small business in underserved markets to have their loan applications analyzed and receive a potential blessing from the SBA before a lender or institution takes it into consideration. It covers loan applications in which the business owner is looking for funds up to $250,000, and its deciding factor involves aspects of the applicant’s credit, experience, reliability, and to some degree, character. This makes it unique among many of the other loans, where the applicant must have assets in order to be qualified.

The main purpose in this particular program is to help you strengthen your loan application. This program can be helpful for an applicant who has relatively good credit and a semi-established business looking for expansion.

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