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<td><h1 style="text-align:center;margin-left:20px;font-size:24px; color:#346633; font-weight:700;">SBA 7 (a) Loans - A Great Solution <br/>to the Financial Challenges Caused by COVID-19</h1>
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<td><p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">COVID-19 has caused the most daunting financial and operational challenges for businesses in our lifetime. The SBA 7(a) Loan is an excellent solution to many of these challenges. This compendium will highlight attributes of this loan that today make it a desirable, practical and accessible means of financing for many businesses currently facing challenges.<p>
<h1 style="text-align:center;font-size:20px; color:#346633; font-weight:700;">Notable Companies have Received SBA 7(a) Financing</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;">The Small Business Administration ("SBA") which gets involved with thousands of loans each year helps companies that are struggling as well as businesses that are seeking to grow. Since 1954, the year after it was founded, the SBA has helped create some of our nation's greatest successes. Apple, Ben & Jerry's, Chipotle, Chobani Yogurt, Federal Express and Nike all received loan assistance from the SBA in the early stages of their businesses. Here is a list of additional recognizable companies where the SBA played a role in funding and growth: Costco, Callaway, Cutter & Buck, Amgen, Intel, Sun Microsystems, Staples, Tesla, Jenny Craig, Build-a-Bear Workshop and Outback Steakhouse.</p>
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<h1 style="text-align:center;font-size:20px; color:#346633; font-weight:700;margin-top:40px;"">A "Small Business" as Defined by the SBA is not so Small</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;">There is a misconception that SBA 7(a) Loans are only for "small businesses". More than 90% of the businesses in the United States qualify as a small business according to the classification system utilized by the SBA called the North American Industry Classification System which is referred to as NAICS. Every company has a NAICS code. NAICS is a Self-Assigned System; no one assigns you a NAICS Code. What this means is a company selects the code that best depicts their primary business activity and then uses it when asked for their code. If your Business Activities include more than one Unique Line of Business, you may want to use more than one NAICS Code. The attached links will allow you to determine your NAICS code. <a style="color:#346633;" href="https://www.naics.com/search/" target="_blank">https://www.naics.com/search/</a></p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;">The NAICS code determines the Size Standard that makes a business eligible or ineligible for an SBA loan. The Size Standard is either expressed as annual revenue or number of employees.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;"><strong>Following are a few NAICS Codes with Size Standards that illustrate that certain businesses can be eligible for SBA 7(a) Loans with as much as $41.5 in revenue or 1,000 employees.</strong></p></td></tr>
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<tr> <td align="center"><strong>NAICS Code</strong></td><td align="center"><strong>NAICS Industry Description</strong></td> <td align="center"><strong>Size Standards <br/>Annual Revenue 000's </strong></td> <td align="center"><strong>Size Standars <br/>Number of Employees</strong></td></tr>
<tr> <td align="center">311812</td> <td align="left">Commercial Bakeries</td> <td align="center"> </td> <td align="center">1,000</td></tr>
<tr> <td align="center">337110</td> <td align="left">Wood Kitchen Cabinets & Countertop Manufacturing</td> <td align="center"> </td> <td align="center">750</td></tr>
<tr> <td align="center">441120</td> <td align="left">Used Car Dealers</td> <td align="center">$27</td> <td align="center"> </td></tr>
<tr> <td align="center">446110</td> <td align="left">Pharmacies and Drug Stores</td> <td align="center">$30</td> <td align="center"> </td></tr>
<tr> <td align="center">446130</td> <td align="left">Optical Goods Stores</td> <td align="center">$22</td> <td align="center"> </td></tr>
<tr> <td align="center">445110</td> <td align="left">Supermarkets & Other Grocery (except Convenience Stores)</td><td align="center">$35 </td><td> </td></tr>
<tr> <td align="center">448140</td> <td align="left">Family Clothing Stores</td> <td align="center">$42</td> <td align="center"> </td></tr>
<tr> <td align="center">454110</td> <td align="left">Electronic Shopping & Mail-Order Housess</td> <td align="center">$42</td> <td align="center"> </td></tr>
<tr> <td align="center">524128</td> <td align="left">Other Direct Insurance (except Life, Health, & Medical) Carriers</td> <td align="center">$42</td> <td align="center"> </td></tr>
<tr> <td align="center">332710</td> <td align="left">Machine Shops</td> <td align="center"> </td> <td align="center">500</td></tr>
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<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Thus, from the sampling above, you can see that even sizable companies are considered to be a small business by the SBA.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">To determine if your business is classified as a "small business" by the SBA and eligible for a SBA 7(a) loan <a style="color:#346633;;" href="https://www.ecfr.gov/cgi-bin/text-idx?SID=b919ec8f32159d9edaaa36a7eaf6b695&mc=true&node=pt13.1.121&rgn=div5#se13.1.121_1201" target="_blank">Click Here</a></p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Why Lenders can be Aggressive Making SBA 7(a) Loans?</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Both bank and non-bank lenders that make SBA 7(a) loans can be more aggressive in approving loans versus other loans due to the guarantees made by the SBA. The SBA provides these lenders with a guaranty of up to 85% for loans up to $150,000 and a guaranty up to 75% for loans greater than $150,000. These guarantees allow lenders to approve loans they might otherwise turndown on a conventional basis. These lenders are also sometimes willing to make larger loans because of the SBA guarantee. </p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">What can an SBA 7(a) Loan be Used for?</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The SBA 7(a)'s flexibility is another reason why it is so popular. It can be used for inventory, machinery or equipment, leasehold improvements, consolidating or refinancing debt, acquiring or refinancing owner-occupied real estate, buying a business or franchise, working capital and even to manage start-up costs. An SBA 7(a) loan can be a solution to many challenges from cash flow to growth. Amid the COVID-19 pandemic, SBA 7(a) loans can help provide solutions as companies restart, return to business or simply move forward during uncertain times where loans can be tough to get.
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">What are the Typical Terms of an SBA 7(a) Loan?</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">SBA 7(a) loans range from $50,000 to $5 million. SBA 7(a) loan maturities are based on loan purpose, useful life of the assets financed and the ability to repay. The maximum maturities for SBA loans are typically 25 years for real estate, 10 years for equipment and often 10 years for working capital. They are usually set up as fully amortizing term loans where interest and principal are repaid on a monthly basis over the life of the agreed upon term. As an SBA 7(a) loan can be used for multiple purposes, ie, working capital and the purchase of real estate, it could lead to what is called a "blended maturity". In this case the repayment term could be based on the maximum term for the asset class comprising the largest percentage of the use of the proceeds. Alternatively, the lender can average the repayment term to derive a blended maturity date. Interest rates are typically variable based on the prime rate and the maximum rate a lender can charge is Prime plus 2.75%. </p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">How SBA 7(a) Loans Level the Playing Field</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The SBA's guarantee goes a long way toward leveling the playing field between a well-established, very profitable business and a typical privately-held business that is marginally profitable. Take a look at two different companies applying for a loan in July 2020, during the COVID-19 Pandemic, the "Well Established Business" and the "Typical Business".</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The "Well-Established Business" was deemed an essential business during the Pandemic and operated at approximately 85% of capacity. This "Well-Established Business" can obtain a $5 million conventional loan from the Commercial Lending Department of Bank A because it has been historically profitable, has significant collateral (providing the lender with a second way out), the owners providing a personal guarantee have significant net worth and high credit scores. This loan might have an interest rate of Prime plus .5%, amortization of 10 years and a five-year term with a balloon payment due at the end of year five.
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The "Typical Business" was not an essential business during the pandemic and was closed half of March and May and all of April. The "Typical Business" can also obtain a $5 million loan from Bank A, but it would be in the form of an SBA 7(a) Loan from the SBA Department of the bank. The SBA Department can make this loan because they would focus on the Company's performance prior to COVID-19 and the viability of the Company's turnaround plan. The projections presented by the Company were realistic and the business plan was feasible. "Typical Business" does not have significant collateral and the two owners do not have substantial net worth. However, it is the SBA Guarantee of 75% that gives the SBA Department the confidence in making this loan. This loan would have a maximum interest rate of Prime plus 2.75%, and would be fully amortizable over 10 years. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The, higher interest rate of 2.25% on a $5 million loan represents an additional cost of $112,500 per year for the "Typical Business". The one-time SBA Guarantee Fee which is paid by the Borrower amounts to $138,125 for a $5 million 7(a) loan. Typically, this Guarantee Fee is paid from the proceeds of the loan so the borrower would not have to go out-of-pocket for this. SBA loans are based on historical tax returns and projections. Audited and Reviewed CPA financial statements are not required for an SBA loan. Thus, while the "Typical Business" will incur higher interest expense and pay the Guarantee Fee, it might be able to offset this cost with reduced accounting fees from its outside CPA firm and from possibly having fewer people in its accounting department as monthly and quarterly reporting are typically not required for an SBA 7(a) Loan.
Thus, the additional costs of an SBA 7(a) loan can sometimes be offset by lowering other expenses.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">An SBA 7(a) Loan can even the playing field between a "Well Established Business" and a "Typical Business" and provide the ideal financing solution to a business suffering from the financial challenges caused by COVID-19.</p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Why the 7(a) is the Perfect Solution to Financial Challenges Caused by COVID-19?</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The SBA 7(a) loan has traditionally been the SBA�s most popular financing program and today is the ideal financing solution for the financial problems caused by COVID-19. It is the Guarantee that the SBA provides to lenders which reduces their risk that makes the 7(a) loan the perfect financing solution for businesses facing the financial challenges caused by COVID-19. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><strong>Some of the challenges that an SBA 7(a) loan can solve include the following:</strong>
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<li> Capital Needed to Restart Operations
<li> No Availability Left on Existing Loan Facility
<li> Difficulty Obtaining Credit from New Suppliers
<li> Funds Needed to Purchase New Inventory
<li> P.O.'s from Customers but no Cash to Execute
<li> Existing Lender not Extending Additional Credit
<li> Funding Needed for All Types of New Projects
<li> Funding Needed to Retrofit the Workplace
<li> Fear of Extending Credit to Customers
<li> Pre-Covid Financial Issues Now Even Worst
<li> Large Orders and Projects � Funds Needed to Mobilize</ul></p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Success Stories of Asset Enhancement Solutions, LLC "AES"<br/>Arranging SBA 7(a) Loans </h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>AES has helped many companies obtain SBA 7(a) loans to fund <br/>operations, refinance, expand, invest in marketing and acquire other companies.<br/> Below are a few examples of businesses we helped.</b></p></td><tr>
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<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Funding an Acquisition</b> - AES helped an Avionics Company financethe acquisition of a small division of a large aerospace manufacturing company with a $4 million SBA 7(a) loan. AES worked with the lender to structure the loan, took the lead on preparing a business plan that highlighted cost savings and synergies, coached the Company's controller on the projections, prepared a Power Point presentation for the lender and prepped management for the presentation.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Purchasing a Competitor</b> - AES helped a Pest Control Company obtain a $300,000 SBA 7(a) loan to purchase the business of a competitor despite the Principal's previous personal bankruptcy and only "fair" personal credit score. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Acquiring Assets</b> - AES helped a Boat Rental Company acquire a yacht that accommodates up to 30 people with a $330,000 SBA 7(a) loan. The Company was turned down by a number of traditional lenders as the historical financial statements and current balance sheet did not support the Company's loan request. AES used its expertise to prepare projections that highlighted the incremental gross profit and net income this new vessel would provide to the Company's bottom line. AES worked with the President to prepare a Business Plan that was informative, realistic and well received by the lender. The Company is now the only boat rental company in the area to have such a boat in its fleet. The $330,000 7(a) loan also included additional working capital for the Company. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Refinancing Debt</b> - AES helped a company that owned five franchise restaurants obtain an SBA 7(a) loan to refinance $1.4 million in existing debt from a family member that needed repayment of funds. </p>
<p style="text-align:left;font-family:arial;color:#0<b>00000;font-size:15px;width:700px;"><b>Funds for Marketing & Customer Acquisition</b> - AES helped a direct marketing company obtain a $1.65 million SBA 7(a) loan which was used to increase advertising, infrastructure and working capital. AES prepared the Business Plan and Projections that highlighted the increase in Enterprise Value that would result from the Company receiving the loan. This was a key factor in being able to obtain lender approval on this challenging transaction.</p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Are all SBA 7(a) Lenders Equal?</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">All SBA 7(a) lenders are not the same! While working with the right lender can lead to a successful closing, working with the wrong lender can waste weeks if not months of time. While SBA 7(a) lenders must follow SBA guidelines, they have their own processes, preferences, track records and specialties. There are some 7(a) lenders that underwrite and review a prospective 7(a) loan very conservatively as if it were a conventional loan. These lenders approve only the most pristine transactions and operate as if there is no SBA Guarantee in place. Alternatively, there are other 7(a) Lenders that are aggressive and know how to creatively structure 7(a) loans for unique and challenging situations. As we say at Asset Enhancement Solutions, LLC, "Beauty is in the Eyes of the Beholder". What might look bad to one lender might look like a great transaction to a different lender. Our job is to know the Beholders that can close transactions for our clients.</p>
<h1 style="text-align:center;margin-left:20px;font-size:20px; color:#346633; font-weight:700;">Benefits of an Experienced Financial Advisor<br/> Like Asset Enhancement Solutions, LLC</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">While receiving an SBA 7(a) loan can help solve a company's problems, it can also be a struggle, with many missteps and delays along the way. A financial advisor like Asset Enhancement Solutions, LLC can make things easier and more efficient, pairing companies with the right lender and helping the company throughout the process. AES works with multiple lenders, knows their preferences, specialties, processes and idiosyncrasies.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">AES knows the information SBA 7 (a) lenders are looking for and how they want it presented. AES is able to anticipate and proactively answer the questions lenders might ask as well as provide the relevant financial analysis to support these positions. These lenders require a credible business plan and detailed projections that reflect the assumptions in the business plan. The projections must be for the current year and two subsequent years and include monthly income statements and balance sheets that are integrated and correspond to the timing of events and milestones discussed in the business plan. If a business has an internal staff or outside CPA that can perform this work, AES can guide them through this process if necessary. If the business needs assistance in actually preparing the business plan and detailed projections, AES can be retained to perform this work.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Regardless of who prepares the business plan and projections, AES shepherds the company through the process with the lender and is there to troubleshoot and mitigate any issues that might arise during the underwriting process so that the transaction can be closed timely and for the loan amount requested by the client.</p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Pros and Cons of an SBA 7(a) Loan</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>There are many positives to an SBA 7(a) loan as well as some negatives. Following is a summary of some of the Pros and Cons of an SBA 7(a) loan.</b></p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Pros of SBA 7(a) Loans</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Higher Loan Amounts</b> - Because the SBA guarantees a portion of these loans, 7(a) lenders are often able to make a larger loan than a business might otherwise receive from a conventional lender.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Lower Interest Rates</b> - The maximum rate that can be charged on a 7(a) loan is Prime plus 2.75%.
For a struggling business, this rate is significantly lower than the rate and fees a non-traditional lender would charge the same borrower. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Longer Repayment Terms</b> - Conventional loans often have shorter terms with a balloon payment at maturity, while SBA loans can range from 10 to 25 years. This typically means lower, more manageable monthly payments and less of a burden on the business.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Minimal if Any Collateral</b> - With a conventional bank loan, lenders typically require an amount of collateral that will provide the bank with a "second way out". Although, SBA 7(a) lenders are required to take all available collateral, lack of collateral should not disqualify eligibility for an SBA 7(a) Loan. However, it is the lender's decision as to whether to move forward on a transaction that lacks sufficient collateral.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>More Emphasis on Projected Results</b> - SBA 7(a) lenders look at historical financial results but will put a greater emphasis on projected results than conventional lenders. The SBA 7(a) Loan is meant to fund businesses that may not otherwise qualify for a traditional bank loan. If the assumptions and credibility of a Business Plan make sense to an SBA 7(a) lender, they are likely to approve the loan. This characteristic of 7(a) loans make it a perfect financing solution to the financial challenges caused by COVID-19.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Covenants</b> - SBA 7(a) Loans typically do not have any covenants!</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Debt Service Coverage Ratio</b> - The debt service coverage ratio for an SBA 7(a) lender could be as low as 1.15 times cashflow versus a conventional lender that might require 1.25 to 1.30 times.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Loan to Value ("LTV")</b> - For certain transactions such as purchasing real estate, the SBA 7(a) lender will lend up to 90% of the purchase price assuming the property appraises properly. Most conventional lenders will only lend up to a 65% to 80% LTV. Thus, a business purchasing owner-occupied real estate with an SBA 7(a) loan has to put down significantly less money than a business financing a purchase with a traditional bank lender.</p>
<h1 style="text-align:center;margin-left:20px;font-size:20px; color:#346633; font-weight:700;">Cons of SBA 7(a) Loans</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Some restrictions on use of funds and types of businesses eligible for an SBA 7(a) Loan - The proceeds of an SBA 7(a) loan can only be used for inventory, machinery or equipment, leasehold improvements, consolidating or refinancing debt, acquiring or refinancing owner-occupied real estate, buying a business or franchise, working capital and even to manage start-up costs. There are also certain industries that that are ineligible for SBA 7(a) loans: some of these include businesses engaged in lending, real estate investing, businesses engaged in legal gambling activities, businesses which restrict patronage (ie. Private Clubs) as well as others.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Documentation Required</b> - There is a significant amount of documentation that is required and many SBA forms that must be completed to apply for an SBA 7(a) Loan. While this could be a turn off to some businesses, for others it is a small price to pay to obtain a sizable loan they may not otherwise qualify for.</p>
<p style="text-align:left;font-family:arial;color:#0000<b>00;font-size:15px;width:700px;"><b>SBA Required to Take all Available Collateral</b>- If a Borrower is not using an SBA 7(a) loan to purchase real estate which is appraised and deemed to be excellent collateral, then the Borrower has to pledge personal assets as additional collateral. Personal assets can consist of a second or third mortgage on a personal residence or investment property, the pledging of cash or stocks and bonds or other forms of personal collateral.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Personal Guarantees</b> - Anyone that owns 20% or more of a business must provide a personal guarantee.</p>
<h1 style="text-align:center;margin-left:20px;font-size:20px; color:#346633; font-weight:700;">Types of Situations an SBA 7(a) Loan is Perfect
For</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>One of the SBA 7(a) loan's greatest benefits is its flexibility, allowing it to be used for a wide range of situations. Below is a brief summary of some of the creative ways SBA 7(a) loans can be used to solve certain challenges.</b></p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Working capital</b> - A distributor who is sitting with a significant amount of inventory from the Spring season due to COVID-19 does not currently have enough cash or credit to purchase inventory for the Fall and Holiday seasons from its vendors. The distributor can use an SBA 7(a) loan to finance the purchase of this inventory and for other working capital needs.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Equipment and Machinery</b> - We recently took on a client that had been trying to raise $7 million in equity since November 2019. The funds are to be used for the completion of the build-out of an indoor Hydroponic Farming Operation. The funds are needed for farming equipment, leasehold improvements, working capital and the repayment of debt to an early stage investor. Not only are we very confident we can obtain a $5 million SBA 7(a) loan for this client, we also vetted their detailed projections and demonstrated to them they only needed $6 million, not the $7 million they initially thought they needed. As the maximum loan amount for a 7(a) loan is $5 million, we will be sourcing the additional $1 million for the client with some of the non-traditional lenders we use.</p>
<p style="text-ali<b>gn:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Repairs</b> - In addition to purchasing equipment and real estate, an SBA 7(a) loan can be used for a wide range of repairs from technology to vehicles to leasehold improvements. This loan can help keep a company competitive, while holding costs down.</p>
<p style="text-align:l<b>eft;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Real estate</b> - We are currently working with a distributor who had financial issues prior to COVID-19 and now has even more challenging problems. The business lost money the past two years because the owner was involved with litigation that significantly distracted him from running the business. He had to finance a property with a 13% Bridge Loan in order to settle the litigation. Due to the large amount of equity in this property, and a vacation home the principal owns, we will be able to put in a $4 million SBA 7(a) loan at 6% that will refinance the Bridge Loan, provide for the purchase of $500,000 of capital expenditures as well as additional working capital. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Renovations</b> - An SBA 7(a) loan can be a good choice to fund renovations. The maximum maturity of SBA 7(a) loans to finance fixed assets other than real estate is based on the economic life of the assets purchased up to a maximum of 25 years. The 25-year term usually applies to acquiring or renovating buildings. And an SBA 7(a) loan can be a desirable way to finance renovations.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Business Acquisitions</b> - One of the most popular uses of an SBA 7(a) loan is for the purchase of a business. It can be used for the acquisition of a business to be integrated into your exiting business or the purchase and continued operations of a business on a stand-alone basis. The lender will look at the Seller's historical tax returns, financial statements and the operational improvements and synergies that will exist once you acquire the business. A 7(a) loan for a business acquisition is fully amortized over 10 years. However, if real estate is part of the acquisition, the term will be longer. Purchasing a business with conventional financing can often be a challenge. Using an SBA 7(a) loan to purchase a business is the ideal way to purchase a small business.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Start-ups</b> - With the proper business plan, projections and background, an SBA 7(a) loan can help launch a business. Whether it is research, payroll, technology or marketing, a 7(a) loan can be utilized to fund these costs. An SBA 7(a) loan is the perfect way to become a franchisee of a successful franchise. The 7(a) loan will finance the purchase of your franchise development rights and also finance the equipment, leasehold improvements and working capital you need to open your franchise.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;"><b>Refinancing</b> - SBA 7(a) terms are very favorable, with respect to rate and repayment terms as compared to other types of loans , making it a practical and desirable option for refinancing existing debt that is more expensive, maturing or is less flexible and onerous. While an SBA 7(a) loan cannot be used to refinance all debt, it can be used to refinance a wide range of debt, leading to lower payments and longer terms. The original debt, however, must be incurred for purposes covered by an SBA 7(a) loan such as acquiring land, construction, improving property, renovations, equipment, furniture, inventory purchase, working capital or acquiring a business. If you have a conventional loan at a bank that also makes SBA 7(a) loans, that bank cannot refinance itself out of a loan using an SBA 7(a) loan. However, the existing bank can provide you with an incremental loan in the form of an SBA 7(a) loan.</p>
<h1 style="text-align:center;margin-top:40px;font-size:20px; color:#346633; font-weight:700;">Save Six Months of Debt Service if you Close your SBA 7(a) Loan by 9/27/20</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">The SBA has been the federal government's lead agency in helping business during the COVID-19 pandemic. As part of its coronavirus relief efforts, the SBA has agreed to pay six months of principal and interest for borrowers that close on a SBA 7(a) loan prior to September 27, 2020.
Following are the Savings that can be achieved for 7(a) loans from $500,000 to $5,000,000 based on 10- and 25-year terms:</p></td></tr>
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<tr><td colspan="2"><b>Interest rate at 6%</b></td></tr>
<tr> <td align="right"><b>Loan Amount</b></td> <td align="right"><b>10 year</b></td> <td align="right"><b>25 year</b></td> </tr>
<tr> <td align="right">$500,000</td> <td align="right">$33.306</td> <td align="right">$19,329</td> </tr>
<tr> <td align="right">$1,000,000</td> <td align="right">$66,612</td> <td align="right">$38,658</td> </tr>
<tr> <td align="right">$1,500,000</td> <td align="right">$,99,918</td> <td align="right">$57,987</td> </tr>
<tr> <td align="right">$2,000,000</td> <td align="right">$133,225</td> <td align="right">$77,316</td> </tr>
<tr> <td align="right">$2,500,000</td> <td align="right">$166,531</td> <td align="right">$96,345</td> </tr>
<tr> <td align="right">$3,000,000</td> <td align="right">$199,837</td> <td align="right">$115,974</td> </tr>
<tr> <td align="right">$3,500,000</td> <td align="right">$233,143</td> <td align="right">$135,303</td> </tr>
<tr> <td align="right">$4,000,000</td> <td align="right">$266,449</td> <td align="right">$154,6323</td> </tr>
<tr> <td align="right">$4,500,000</td> <td align="right">$299,755</td> <td align="right">$173,961</td> </tr>
<tr> <td align="right">$5,000,000</td> <td align="right">$333,062</td> <td align="right">$193,290</td> </tr>
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<h1 style="text-align:center;margin-top:40px;font-size:24px; color:#346633; font-weight700;">About Asset Enhancement Solutions, LLC</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">
Asset Enhancement Solutions, LLC ("AES"), is a financial advisory firm that provides both Investment Banking and Consulting Services to companies considering important transactions such as selling a company, acquiring a company and raising capital. We specialize in arranging debt and equity financing for companies with challenges. Unfavorable challenges such as operational, legal, tax, financial or liquidity issues or positive challenges such as opportunities for growth, acquisitions and long-term success. AES works with middle market companies, public companies and small businesses.
</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">AES arranges financing for businesses when traditional banks say no, and as such, is a resource for businesses, their accountants and attorneys. AES can help banks maintain customer relationships by arranging financing for their customers with non-traditional funding sources. Asset Enhancement Solutions, LLC has arranged over $500 million in financing for both private and public companies in a variety of industries and geographical areas. We can manage the process of sourcing debt or equity financing which businesses need for short and long-term growth or survival. We never shy away from adversity; we embrace and thrive on it. We have the experience and expertise needed to find Creative Solutions to Financial Challenges.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">To learn more about how Asset Enhancement Solutions, LLC can assist you with your transaction, please contact: </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Neil Seiden, President<br/>
Asset Enhancement Solutions, LLC<br/>
405 RXR Plaza<br/>
Uniondale, NY 11556<br/>
(516) 767-0100<br/>
<a href="mailto:[email protected]" target="_blank">[email protected]</a> <br/>
<a href="http://www.assetenhancement.com" target="_blank">www.assetenhancement.com</a></p>
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