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.
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