PLAN: FAQ

Q: What’s the advantage of working with Sitar Group to secure financing?

While you can surely approach lenders on your own, the advantage of working with Sitar Group is our expertise at putting together custom loan packages, our relationships with over 40 commercial lending sources and our understanding of the entire process of securing capital in today’s economy. Because our clients know what to expect and present to a lender, they have a distinct advantage and a noticeable confidence in their success to obtain financing and as business owner.

Q: What fees are associated with your services?

Fees are loan specific and vary depending on the amount of preparation required of business plans and documentation (see SERVICES for more information). As a general rule, however, there are no fees unless you get funded.

Q: Do I need a business plan to secure financing?

If you are a start-up business, you will need a business plan. If you are an existing business in operation for more than two years, you will need to submit historical and year to date financials, compile a summary narrative on the history and nature of your business. Or, if you are expanding your business in some way, you will need to outline your expansion plans, including how funds will be used to fuel expansion. Click HERE you are interested in learning more about our business planning services.

Q: I’m not sure how much money I need, do you help with this?

Certainly. We help all of our clients weigh several factors to determine their actual capital needs. On one end of the spectrum – sometimes business owners believe they need more capital when in fact they need to manage cash flow or receivables more effectively. Sitar Group considers all factors when determining a financing request, including: key assumptions on revenue and expense projections, potential pitfalls, industry outlook, seasonal/cyclical needs, human resources needs among other factors.

Q: I’m interested in starting a business with a small business grant, do you help with this?

Allow us to provide a word of caution here. Grants to start a business for the most part do not exist. While there are economic incentives available in most cities, these incentives are very specific in how they can be used and come with a punch list of requirements based on net worth, industry, location, number of employees and other factors.

For more information on this please review our blog posting here.

Q: I’m interested in an SBA loan, how does that work?

A lender provides the actual loan to the borrower. The SBA guarantees a portion of the loan (between 50%-85% depending on the program) acting much like a co-signer. This helps lenders be more comfortable with a loan that they might otherwise not approve, such as a loan for a start up, or a borrower that has less collateral than a bank requires.

Q: Why should I consider an SBA loan?

There are many reasons why an SBA guaranteed loan should be considered, including: Longer terms (up to 7 years for working capital; up to 25 years for real estate), flexible repayment options, lower down payments for commercial real estate and improved cash flow, so you can use your cash in your business.

Q: How do I qualify for an SBA loan?

A bank would expect you to be able to repay the loan from the cash flow of the business. You must be of good character and never convicted of a felony. The SBA typically looks for management capability, collateral pledged and owner’s equity contribution as part of the deal. If you own 20% or more of the company, you will be required to personally guarantee the loan. There are some industries that are not eligible for an SBA loan. If you Contact Us, we’d be more than happy to discuss the requirements for qualifying for an SBA loan.

Q: How much money can I borrow?

The amount of allowable money borrowed is contingent on many factors. The strength of credit history, previous credit limits, income, residence status, business gross sales, and your time in business are some of the major factors that contribute to acquiring a commercial loan.

Q: What typical documentation will I need when working with you?

For fully underwritten loans, you will need all application forms completed, personal and business tax returns for the last three years, financial statements on the business for the last three years, an interim financial statement since your last tax reporting period. For start-ups, you will need a business plan, projections and assumptions on which the projections are based. You will not have business tax returns or financial statements.

Q: I have some problems with my credit report; how good does my credit have to be?

We want to see that you are presently current on all your debt, that any derogatory marks on your credit report from the past are at least a couple of years old and that you have a reasonable explanation as to what happened.

Q: Is it possible to secure 100 percent of my startup cost?

That is extremely difficult in today’s lending environment. Lenders and investors want to see business owner’s with some “skin in the game”. The minimum owner’s equity injection is usually 10% to 15%, putting down 20%-40% is more common and desired by most lenders. Owner’s equity can come from savings, equity from a home, retirement funds, etc. For example, if it takes $100,000 to start your business, you will be required to inject $30,000 (30%); you will request a loan of $70,000.

Q: Can items already purchased be counted as my capital injection?

Yes, as long as you have receipts for purchases made and proof of payment, funds already spent in the start up of your business can be applied toward your owner’s equity.

Q: What would be considered collateral?

The best form of collateral is real estate. If you own your home you will be required to use it to secure the loan. Real estate located outside the U.S. cannot be used. Business assets, autos, inventory and whatever is purchased with loan proceeds can also be used to secure the loan.

Q: How long does it usually take to get financing?

Depending on which loan program you apply for, approval time varies. Credit-based products take just a few days to determine approval. For fully underwritten loans, we will review your request and contact you within a week as to whether we have identified a possible lender for you. After that, it generally takes about one month to get an answer regarding approval. It takes 3-4 weeks after that to get funding.

Q: Do I need to identify my location prior to applying for a loan?

Retail businesses need to identify their location because the site is a factor in start-up costs, leasehold improvements/build out cost and projections. Often you can talk to the landlord and let them know you are interested in their location to see if they will hold it for you. You won’t want to sign a lease until your loan is approved, but you will want to identify your proposed site in the business plan and develop your expenses and projections towards that location.