SBTM Jul 2015 - Page 27

EDITORIAL FEATURE Swimming Success through an SBA Loan   By Bruce Hurta A swimming academy opened in 2004 to offer infant aquatic survival education to area children.  It all began as the result of a critical care nurse who had worked on a child who had drowned and was motivated to protect her own children.  She became certified in Infant Aquatic Survival and began teaching children in her backyard pool but was soon teaching 12 hours straight.  It was then that she realized that it was time to grow. Neither her husband nor she had prior business experience but they refused to let that get in their way.  Instead they sought out resources dedicated to helping entrepreneurs succeed.   Organizations like SCORE and the local University of Houston Small Business Development Center helped them to build a strong business plan.  In addition, they attended business development and finance courses and participated in the Goldman Sachs 10,000 Small Businesses program at Houston Community College. They soon realized that a custom built facility would be necessary to their success but the couple didn’t have the collateral or cash that traditional business loans called for.  They knew that an SBA loan would be their best option.  During the application process, it was determined that they were an excellent match for the SBA program.  That’s because SBA loans consider five different criteria: 1. Investment – The amount of investment in the business compared to what is expected from the lender.  This allows the lender to determine risk. 2. Future Cash Flow - An analysis of future cash flow helps determine the SBA Preferred Lenders have the ability to reach beyond the paperwork and consider the couple’s personal traits and aspirations for making a difference in their community.  With the founder’s expertise in Infant Aquatic Survival and her husband’s background in business and finance, combined with the resources available to them, the couple made a convincing proposition and received a $1.5 million Small Business 7 (a) Loan to finance the facility. business’s ability to repay the loan.  The couple’s rapid success thus far and their sound business plan indicated strong revenue potential. 3. Management Background - This can include educational and industrial business experience, a track record of managing a similar or related business, any education and training the borrower has received in preparation of business ownership, and any partners or shareholders with sufficient experience. 4. Credit History – The borrower’s personal credit history is also considered. In the eyes of the lender, a borrower with a good record will most likely want to preserve it. 5. Collateral - Lastly, a lender will consider any collateral offered for the loan.  This includes any business or personal assets such as equipment, buildings, or inventory. SBA Loan Approval A Mix of Science and Art The SBA loan approval process is a mixture of science and art.  A lender cannot predict the future or methodically decide whether or not to approve a loan for a business. They can only evaluate the five criteria in relation to one another based on experience and statistics on business failures and loan defaults.  What differentiates the underwriting process for an SBA loan from that of a conventional loan is the personal consideration.   SBA Preferred Lenders have the ability to reach beyond the paperwork and consider the couple’s personal traits and aspirations for making a difference in their community.  With the founder’s expertise in Infant Aquatic Survival and her husband’s background in business and finance, combined with the resources available to them, the couple made a convincing proposition and received a $1.5 million Small Business 7 (a) Loan to finance the facility. The business was profitable within the first year and now, three years later, they have plans for a second facility that will focus on competitive swimming which they hope to open by the summer of 2016. SBT     You can learn more about SBA lending and small business finance on Bruce’s blog at brucehurta.wordpress.com.  For more information about SBA real estate loans for small businesses, contact Bruce Hurta, VP of Business Lending at Members Choice Credit Union at 281-384-2595 or by email at bhurta@mccu. com. [ JUNE / JULY 2015 ] WWW.SBTMAGAZINE.NET 25