[Olderguy]

Steve, with all due respect to you, I know that you are a senior member here at DF, but we are all lucky that Kevin Henry, VP-Business Development, at Seacoast Business Funding, a division of Seacoast Bank provides us with responses and shares his knowledge with us. It is my understanding that Seacoast Business Funding, a division of Seacoast Bank, was in dire straits since Mr Henry's previous departure and it is now back well on its way to becoming the powerhouse that it use to be under his previous tenure. My wife wakes up every morning and checks Mr Henry's profile to see if there have been any new posts and then we discuss all of his input and insights at the dinner table every night. Whenever I make decisions, i always ask myself what would Mr Henry do?

Instead of arguing with him, I would instead suggest saying thank you and reflecting on why you are wrong and he is right. Just my opinion.

A bank is not a non bank lender and I respect his opinion but in this case I think my experience trumps his opinion. I think I have broken down some of the issues a non experienced broker will have trying to go direct with no experience.

But Ok....I agree there are SBA lenders that can assist a broker into that platform and guide them. And it's up to the broker to decide.

And think on this - why spend all your time and energy on a file that only pays 2% when you can be pumping out MCA deals and have someone else who is more experienced work the file and just spit the fee? Doesn't that seem more financialiy sound for a broker shop?


And here's an example of getting a SBA approval that was denied by the lender, to the broker who sent it to me. Yes, I've posted this before:

Here's what the broker submitted to his SBA bank:

Covid has had very little impact on our business. During the height of the pandemic, we did some deep sanitizing which was a profit center. Except for the hassles of dealing with contractors getting sick and having to deal with scheduling, operations have remained stable.

We are currently billing 103 different clients. We operate as a contract cleaning company. This simply means that we have contracts and are billing one time per month for services. Cleaning schedules range from 1 service monthly to 365 day per year service.

We are simply looking to consolidate the debt that we currently have. This will give us the flexibility to pursue additional contracts and continue expansion. We are currently bidding 5 different contracts. One of the contracts will be approximately $2600.00 per Month. Three of the proposals are small accounts that would be $275- $400 per month. If we can come to terms, one of the contracts would total $22000.00 per month. These are the contracts that I need financial flexibility to pursue. Our largest current contract is about $5900.00 per Month. One as large as $22000, will require me to lay out about $15000 before receiving the first check.

HERE'S WHAT I SUBMITTED:

We are seeking $350,000 in SBA 7A financing to:

A. Consolidate business debt and reduce debt payments
B. Obtain working capital to service current bids that are pending awaiting capitalization.

We want to pay off $178,00 in 4 high interest business loans that have a monthly expense of $17,373. A SBA 7A at 6% will reduce this to $1,980 a month = saving us $15,393 a month. Note: We have several vehicles that are required for this industry - debt which is separate on the balance sheet and form 2202.

We are in the process of submitting bids for several new clients. We need $150,000 in additional working capital for labor/materials/overhead to service this new business.

Client A $275 a month
Client B $400 a month
Client C $22,000 a month
Client D $2,600 a month
Client E $300 a month

Total new business bids: $25,5475 a month projected increase in revenue

We are currently billing 103 different clients operating as a contract cleaning company. Covid has had very little impact on our business. During the height of the pandemic, we were performing deep sanitizing so operations grew in sales and net income.

Total revenue for 2021: $1,025,000
Net income: 126,854
Depreciation: 51,500
Net income w/o deprec. 178,354

Total revenue for 2020: $761,109
Net income (437)
Depreciation: 138,672
Net income w/o deprec. 138,235

Total revenue for 2019: $461,435
Net income: 12,825
Deprec: 104,591
Net income w/o deprec 117,416

We have two SFR real estate properties and 1 ten acre of land with equity in all to collateralize this loan.

Fico is a bit below 660 due to a recent purchase of several trucks and use of company credit card equity to help some employees.

File was denied by a bank SBA lender due to DTI issue but the submission combined vehicles with business loans.

We received an approval for $350,000 but after underwriting, got final at $250,000. However my lender said after 2 - 3 months of payment history, they would give him another $100,000 for a total of $350,000 under the SBA 7A.

The file wasn't packaged and submitted correctly. And maybe Kevin is right, a more professional SBA lender may have corrected and submitted this.

So use your judgment and act according to your feelings on the matter reviewing the facts and the kind of relationship you might develop with a lender that may work.