Cleaning & Restoration Breaking News

Big help for new guys

July 20, 2005
/ Print / Reprints /
/ Text Size+
MANATEE - (Bradenton Herald) - George Beaubien needed money to advertise for his company, a water-damage-restoration and mold-remediation business. Mold Master Pros Inc.'s status as a new business, however, made it difficult to get a loan, so he took advantage of a program sponsored by the Small Business Administration.

"If you haven't been in business for a year, you're even less likely to get one (a loan)," Beaubien said.

This fiscal year, the Small Business Administration expects to process more loans than ever for companies like Beaubien's. The SBA took itself out of the process for its most popular loan program by shifting procedural responsibility to lenders, which quickened loan delivery times and gave the agency more opportunity for outreach.

"It's a helpful start," Beaubien said. "We have a new business and they don't like to loan to new businesses."

The SBA backed nearly 83,000 loans during the 2004 fiscal year, nearly double the number of loans processed in 2001.

"This year looks like another 20 percent," said John Dunn, assistant director of the South Florida district.

Overall, almost a third of the loans went to minority business owners, according to a statement issued by the SBA.

Seven to 10 years ago, the average loan in the South Florida district approached $800,000, compared with today's $140,000 average, Dunn said.

"The loans are getting smaller, which means we're getting our money to smaller businesses who have a harder time getting loans," Dunn said.

The SBA offers two main types of loans to small companies -

  • 7(a) loans accounted for 74,825 of the loans, totaling $12.5 billion
  • 504 loans reached 8,168, worth $3.9 billion.

    The first type, the 7(a) program, provides a partial guarantee on a loan that is funded by a participating lender. It is the most basic and most used loan.

    The 7(a) loans may be used for most business purposes, such as furniture, debt refinancing or working capital.

    The maximum loan that SBA will process is $2 million, with a guarantee of up to 75 percent or maximum guaranty of $1.5 million, Dunn said. This fiscal year, the SBA established a $350,000 cap on a type of 7(a) loan called SBA express, which accounts for 65 percent of 7(a) loans.

    The 7(a) express loans are different this fiscal year in that there is no longer any application processed through the SBA. Now, lenders use their own forms and procedures to process loans.

    "Banks approve now, instead of SBA approval," Dunn said. "The SBA in the express program is virtually invisible."

    The result is a dramatically shorter delivery time for loans. Beaubien, for instance, was able to get his loan in a matter of weeks, not the monthslong process it used to take.

    SBA now processes just 10 percent of loans, Dunn said.

    "That's how SBA transformed from a back-office loan agency to a marketing agency," Dunn said, adding that the organization now has the ability to to do more outreach, such as teaching banks and the community about the program.

    The second type is the 504 loan program, which is a long-term tool for companies that want to expand or modernize, according to SBA.

    Mostly real estate or fixed asset loans, 504s require a 10 percent contribution from the borrower. The bank will issue a 50 percent mortgage or lien, while a certified development company will cover the remaining 40 percent of the loan with a second mortgage or lien guaranteed by the SBA.

    This fiscal year, the amount of the SBA loan under the 504 program increased to between $1.5 million to $4 million for certain circumstances, such as job creation ability or if the company is a manufacturer.

  • Did you enjoy this article? Click here to subscribe to i Cleaning Specialist Magazine.

    You must login or register in order to post a comment.



    Image Galleries

    The 2014 Experience Conference and Exhibition

    A look in photos at the 2014 Experience Conference and Exhibition, which was held from April 24-26 at the Embassy Suites Convention Center and Spa in Frisco, Texas.


    Have a limited marketing budget but realize the importance of neighborhood marketing? Try doorknob hangers, a low-cost, yet highly effective way to drum up more business. In this episode, John Braun discusses the value of this tactic as well as what you should include on the materials you're hanging.
    More Podcasts

    ICS Cleaning Specialist Magazine


    2014 September

    The September issue of ICS features stories on moisture detection, disinfectant services, neighborhood marketing, then we discuss the last level of being phenomenal, and cool products.

    Table Of Contents Subscribe

    Social Media

    Social media is a good way to regularly keep in touch and interact with current clients and reach potential ones. What social mediums do you use in your cleaning/restoration business?
    View Results Poll Archive


    Get Paid! book cover
    Get Paid! (ebook)
    Over 30 authors – over 40 articles…from attorneys, contractors, consultants, instructors and others, both inside and outside the restoration industry. R & R, C & R and Cleanfax, opened their archives and gave us the best they had, other chapters were created just for the “Get Paid!” book and its readers. And every one of them has ideas for how to get paid what you are owed.

    More Products


    Director_Buyer.jpgThe premier resource and reference guide for the cleaning and restoration industries.

    Click here to view


    Truckmount.jpgEquipment listings and specifications from the leading industry manufacturers.

    Click here to view


    facebook_40.png twitter_40px.png youtube_40px.pngcrc logo