Of course, no part of the guaranteed loan proceeds may be used to fund the equity injection. However, this does not mean that the loan should be approved automatically. All other credit factors must support the approval, and SBA's collateral requirements must also be met. Independent third party valuation confirms that the price is realistic. Historical earnings are strong.
Patients pay at the time of service without exception.
Collateral is limited to the assets of the business. In this example, the requested financing represents more than 90 percent of the total capital needs of the business. However, the approval still would require support from the evaluation of other credit factors to offset the weak equity position. As in the first example, all other SBA financing requirements must be met, including its collateral requirements. However, since the business would not have an existing clientele upon which to base the cash flow necessary to support the loan, other credit factors need to be even stronger to offset the weak equity position.