Decision Vision Episode 34: How Do I Get an SBA Loan? – An Interview with Joy Manbeck, Vinings Bank
What are the different loan options in the SBA loan program? How do I qualify? Joy Manbeck, a banking veteran with particular expertise in SBA lending, joins “Decision Vision” host Mike Blake to answer these questions and much more. “Decision Vision” is presented by Brady Ware & Company.
Joy Manbeck, Vinings Bank
Joy C. Manbeck is a Senior Vice President and Director of SBA Lending with Vinings Bank. Joy is an Atlanta native who has been in banking for over 35 years. For most of her career she has been in commercial and small business lending with several different Atlanta-based banking institutions. Her community and civic roles include 2019-2020 President of the Rotary Club of North Fulton, alumnus of Leadership North Fulton, board member of Capital Partners Certified Development Corporation, member of the Board of Trustees of Alpharetta First United Methodist Church, and volunteer youth leader at Alpharetta First United Methodist Church. Joy is a graduate of Georgia State University with a degree in Finance, and her hobbies include fitness, gardening and violin.
Vinings Bank was established in 2007 to offer something unique by combining community-based banking expertise with services that create an environment that encourages both growth and prosperity. They offer a full range of financial products and services including specialized deposit solutions for business checking, sophisticated lending options, and outstanding cash management services to help businesses thrive.
To contact Joy, you can email her directly or call (678) 710-2820.
Michael Blake, Brady Ware & Company
Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.
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Show Transcript
Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions, brought to you by Brady Ware & Company. Brady Ware is a regional, full-service, accounting and advisory firm that helps businesses and entrepreneurs make vision a reality.
Michael Blake: [00:00:21] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic. Rather than making recommendations because everyone’s circumstances are different, we talk to subject matter experts about how they would recommend thinking about that decision.
Michael Blake: [00:00:39] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on your favorite podcast aggregator, and please also consider leaving a review of the podcast as well.
Michael Blake: [00:01:04] Our topic today is, should I consider taking out an SBA loan? And I’m excited to cover this topic because although I don’t do a lot of stuff with banks, frankly, my skill set is more on the the equity side as a recovering venture capitalist and so forth, but I do—it is my belief that the SBA loan program is one of the least understood or most commonly misunderstood opportunities for small business finance out there. And frankly, it’s also—in spite of the fact that there are many outlets and many venues that are promoting the SBA program, it’s a program that not many people even know about. And if you’re a small business, and you’re looking at financing, if you’re looking at acquiring a small business, it might even be a franchise, if you don’t know about the SBA program, you really are leaving important options available to you off the table.
Michael Blake: [00:02:05] And like I said, I’m really not qualified to talk more than a very superficial level about the SBA program. So, if you’re a listener to the show, you know what’s coming next. I’ve brought in an expert who does know about the SBA program quite a bit. And here joining me is my pal, Joy Manbeck, who is a Senior Vice President and Director of SBA Lending with Vinings Bank.
Michael Blake: [00:02:32] And sort of funny story. Joy and I have known each other, I think, for 10-12 years or so, and we haven’t been in contact. We sort of all do our various things. Joy was off taking over corporate America, and I was probably in a gutter somewhere. But we happened to run into each other at an event where we had both recently joined our new companies as a mixer to my firm, Brady Ware, and her bank, Vinings Bank. And it turns out now that we are about 500 yards away from each other in terms of where our offices are; though, neither of us is actually ever there because are always on the road. But at least, theoretically, now, we’ve come together. And that’s kind of what got my wheels spinning about this particular topic.
Michael Blake: [00:03:14] So, Vinings Bank was established in 2007 to offer something unique by combining community-based banking expertise with services that create an environment that encourages both growth and prosperity. They offer a full range of financial products and services, including specialized deposit solutions for business checking, sophisticated lending options and outstanding cash management services to help businesses thrive.
Michael Blake: [00:03:36] Joining is an Atlanta native. Haven’t heard of any Atlanta natives left anymore. Has been in banking for over 35 years. She graduated from Georgia State University with a degree in Finance. And her hobbies include fitness, gardening, and violin. I did not know that. We’re going to have you on our band.
Joy Manbeck: [00:03:52] I would not at all.
Michael Blake: [00:03:53] We’ll do a Dexy’s Midnight Runner kind of cover situation there. She has a number of community and civic roles. She is a 2019-2020 President of the Rotary Club of North Fulton. She is an Alumnus of Leadership North Fulton. She is a Board Member of Capital Partners Certified Development Corporation, is on the board of trustees of Alpharetta United Methodist Church, and is a volunteer youth leader, also, with the Alpharetta United Methodist Church. Joy, thanks for coming on the program and somehow making time because you do a lot.
Joy Manbeck: [00:04:27] Well, thank you for having me. It’s an honor to be here.
Michael Blake: [00:04:29] People talk about banker’s hours, man. They have not met you. So, let’s get started. Let’s start with the very basics. What is a small business administration loan?
Joy Manbeck: [00:04:42] Well, an SBA loan, SBA was started in the 1950s to help businesses who were struggling with getting loans to help incent banks to make loans by guaranteeing a portion of the loan. So, 7-day loan, that’s the seven day program, it has a 75% SBA guarantee. And then, the bank takes the risk of the 25%, and then the SBA guarantees the 75. The bank makes the whole loan. And then, the government guarantees it.
Michael Blake: [00:05:15] So, why do companies consider taking out an SBA loan versus a more conventional financing instrument?
Joy Manbeck: [00:05:21] Well, several reasons. One is the longer terms. Financing equipment, usually, is over a 10-year period. No balloon payments. Real estate, we can finance over a 25-year period. Again, no balloon payments. And then, the amount down can be as little as 10%. Also, businesses that are special use like a daycare, gas station, car wash, they have a little bit more trouble in the conventional world getting financing. And so, SBA is, usually, a partner with those type businesses.
Michael Blake: [00:05:54] And so, you say, for example, a 10-year repayment period. In a more conventional loan, what do those repayment periods look like? Is it like a three to five-year or maybe even quicker?
Joy Manbeck: [00:06:05] Typically, usually three. At least, they’ll amortize them sometimes over 20 years if it’s real estate. 20-year amortization, three, five or seven-year call feature typically on those.
Michael Blake: [00:06:17] So, my understanding is that not all SBA loans are created equal. There’s actually a number of programs out there. So, can you highlight a few of those specific programs?
Joy Manbeck: [00:06:25] Certainly. As I mentioned, the seven day program a few minutes ago, these are eligible for any most small for-profit businesses. And it’s for a myriad of things. It could be to purchase real estate, construction, buying fixed assets, purchasing another business, starting a business, or working capital purposes. Seven day covers all of that. Then, you’ve got the SBA, what’s called a 504 program. And that’s only to buy real estate or fixed assets. And then, another one that’s become very popular is something called the cap line, C-A-P L-I-N-E. And that’s another 75% guarantee program up to $5 million, but it is an in an out line of credit.
Michael Blake: [00:07:09] Now, in the past, I think the SBA has also had so-called express loans. Is that right? Like for veterans, things of that nature. Do they still exist? Am I right? And if so, can you tell us about those?
Joy Manbeck: [00:07:20] They do. This is not something I have a lot of expertise in, but it’s a—an express loan would also be a line of credit. It would be a shorter term. And those loans are usually $350,000 and under.
Michael Blake: [00:07:31] Okay.
Joy Manbeck: [00:07:33] You have 50% guarantee on those.
Michael Blake: [00:07:35] So, for your needs, as long as you’re not trying to buy Apple, sounds like there’s potentially an SBA loan out there for somebody.
Joy Manbeck: [00:07:43] Absolutely.
Michael Blake: [00:07:44] So, what kinds of companies are good candidates for SBA loans? I assume there must be some that are kind of better than others.
Joy Manbeck: [00:07:53] Again, it’s for for-profit businesses. And basically, I mean, there are certain industries. Gambling, we can’t loan to. We can’t lend to finance companies. But pretty much anything, any for-profit business professionals. As I mentioned, car washes, restaurants, daycares, funeral homes, you name it.
Michael Blake: [00:08:15] And the SBA is actually a big source of franchise financing, right-
Joy Manbeck: [00:08:18] Absolutely.
Michael Blake: [00:08:18] Because it, actually, maintain—I think, it’s a pretty interesting list of the most successful franchise in terms of low failure rates, and then ones that are a little bit dicier-
Joy Manbeck: [00:08:27] Correct, yeah.
Michael Blake: [00:08:29] … for lack of a better term.
Joy Manbeck: [00:08:30] Right.
Michael Blake: [00:08:31] So, what about—the world I play in, as you know, is a lot of technology companies. Now, I presume that SBA is not a replacement for venture capital. There’s just not that kind of financing. But are there scenarios in which a technology or technology-driven company might also consider an SBA loan?
Joy Manbeck: [00:08:50] Oh, absolutely. And we loan to technology-driven companies quite a bit. So, they are totally eligible. Their terms are usually going to be—it’s usually for working capital purposes. So, if it’s permanent working capital, like a 10-year term, but the lines of credit are also good for those.
Michael Blake: [00:09:08] Okay. And then. you talked about companies that are not good candidates for SBA loans. You talked about casinos, I guess. Gaming is not going to be a good candidate.
Joy Manbeck: [00:09:18] That’s right.
Michael Blake: [00:09:21] I would assume a marijuana company is not going be a good candidate yet. That may change. But right now, we’re not there.
Joy Manbeck: [00:09:26] You’re right.
Michael Blake: [00:09:28] Finance companies. So, you don’t want people borrowing money from the SBA to, then, lend it out to somebody else. That’s not-
Joy Manbeck: [00:09:33] That’s absolutely right.
Michael Blake: [00:09:34] That’s not the goal of the program. Any other companies that, probably, come to your mind that they may not be great fits.
Joy Manbeck: [00:09:41] Not that are for-profit. Pretty much—I mean, if it’s legal, and if it’s not a finance company or a gambling company, typically it’s eligible.
Michael Blake: [00:09:53] Okay. So, I’d like to spend our time on the seven day loans because, I think, one, I’m not knowledgeable about real estate at all. I’m not even very good at monopolies. The 504 things have been great to me. But I think most of our listeners are more likely to be interested and candidates for the seven-day program. So, can you dive a little bit deeper into that? What does a seven-day loan look like? We talked about a 10-year term. Was it look like in terms of typical collateral coverage, interest rates, things of that nature?
Joy Manbeck: [00:10:23] Okay. Very good question. First of all, SBA gives us a set of regulations that we have to follow. But then, banks can use their own, I guess, credit guidelines. So, SBA is not a collateral lender. So, if the loan is not completely collateralized, andmost conventional lenders want their loans completely collateralized. So, that’s up to the lender if they want to make the loan with an SBA guarantee on it. However, if the loan is not fully collateralized, and the borrower has outside collateral, personal collateral, SBA does expect them to pledge it. So, that’s one advantage of getting an SBA loan. It does not have to be fully collateralized, but we are required to take available collateral. The other thing is cash flow. We’re gonna look at debt serviceability. SBA’s minimum debt serviceability is 1.15:1. We, as a bank, like to see 1.25:1.
Michael Blake: [00:11:22] And that, what’s that? What does that ratio mean?
Joy Manbeck: [00:11:24] That means that your cash flow available to cover the proposed debt service on-
Michael Blake: [00:11:29] Principal and interest.
Joy Manbeck: [00:11:30] Principal and interest.
Michael Blake: [00:11:30] Okay.
Joy Manbeck: [00:11:32] Absolutely. But again, that is up to the bank. That’s a guideline with SBA on the 1.15. So-
Michael Blake: [00:11:38] Okay.
Joy Manbeck: [00:11:38] … we can—our bank looks at loans globally. We’ll look at all the components and make a decision from there.
Michael Blake: [00:11:46] And what about interest rates? My understanding is, at least, the one point that used to be fixed to the prime rate, usually, 1% to 2% over prime. Is that accurate? Is that still true? What does that kind of look like?
Joy Manbeck: [00:11:58] Well, we offer—Vinings offer is a couple of options. And most banks don’t offer fixed rates. We occasionally do, especially on our real estate loans. They’re going to be probably in the mid to high sevens. And they’ll be fixed for the full 25-year term. Typically, most SBA lenders are going to loan over prime. It’s gonna be typically around prime and two. You can loan up to prime plus 2.75. And then, it’s adjustable usually on the calendar quarter.
Michael Blake: [00:12:27] Okay, which makes sense cause that’s usually when the Fed adjusts anyway. So, you’re kind of on the Fed’s calendar.
Joy Manbeck: [00:12:35] Absolutely.
Michael Blake: [00:12:36] So, the question I think a lot of people will ask and where I find that the greatest misunderstanding about the SBA program is that you hear SBA, you hear that it’s got the eagle on, it’s got the federal logo, and everything; and therefore, you think like Donald Trump is writing your check or a Washington-based loan.
Joy Manbeck: [00:12:58] Right.
Michael Blake: [00:13:00] That’s not actually the case, is it?
Joy Manbeck: [00:13:01] Not on seven days. On seven days, the bank makes the loan, and SBA guarantees it. So, your funds come from the bank. They’re guaranteed by SBA. And then, the borrower makes the payments directly to the bank, and the borrower communicates directly with the bank.
Michael Blake: [00:13:17] Now, you at Vinings Bank are preferred lender.
Joy Manbeck: [00:13:20] We are
Michael Blake: [00:13:20] As are other banks, but not all banks are. So, what does it take to become a preferred lender. And if I’m a borrower, why should that matter to me?
Joy Manbeck: [00:13:28] Well, it’s huge for the borrower. First of all, to be able to qualify, you have to, in a 24-month period, have five loans that are approved by SBA on a direct basis. That means your bank approves them in our loan committee, and then we submit them to SBA, they underwrite them, and they are proven. So, once you’ve gotten to that five-limit approval of loans, then you can apply for preferred lender status, which means that you have the choice of once you approve the loan at the bank level, you can go ahead and just say it’s approved, and get your SBA loan number, and go move forward with closing.
Michael Blake: [00:14:02] And if you’re not a preferred lender, how does that differ?
Joy Manbeck: [00:14:05] It could take up to two to three weeks to get your loan approved with SBA, a lot longer.
Michael Blake: [00:14:10] And that point, I want to zero in on that a little bit-
Joy Manbeck: [00:14:14] Sure.
Michael Blake: [00:14:14] … because, again, one of the one reason that people, I think, shy away from SBA loans, when I say, “Think about the SBA,” they say, “How long is the government going to take to make a decision?” But in fact, the government, especially if it’s a preferred lender, is not making the decision at all, right? They’ve empowered the bank to do that.
Joy Manbeck: [00:14:32] That’s correct. I mean, and we do have to make sure that we do everything according to their regulations because we’re going to get audited eventually. And then, we’ve got to have everything as instructed. But we take care of that on our end. We do all the underwriting, but we underwrite them completely with SBA guidelines or regulations.
Michael Blake: [00:14:50] And so, the relationship is that the bank is lending the money and the US government is basically a guarantor-
Joy Manbeck: [00:14:56] That is correct.
Michael Blake: [00:14:56] … in case it doesn’t work out, basically.
Joy Manbeck: [00:14:58] Absolutely correct.
Michael Blake: [00:14:59] So, this may not be a fair question, but I just have to ask you. I mean, what happens if a loan does go bad?
Joy Manbeck: [00:15:07] Well, the first thing we do is try to work with the borrower. We try to get with them, find out what’s going on. Do they just need a payment deferment for a while, or are things turning around, or is this a case where the loan is just defaulting, and there’s nothing to be done? So, then, we begin to foreclose. We foreclose on whatever collateral is available. Then, if there’s a gap, then there’s always a guarantor on the loan, personal guarantor, at least, one, anybody, 20% and over as far as shareholder. They’re required to fully guarantee the loan. So, we will go to them, work with them, and try to resolve that gap. But if not, then we take further steps legally.
Michael Blake: [00:15:51] So, another point, one of the things I advise my clients who are asking about the SBA or talking about the SBA is that I think the SBA lenders do as good a job as any in trying to prevent a default, right?
Joy Manbeck: [00:16:07] Absolutely.
Michael Blake: [00:16:08] I think you get a lot more flexibility from an SBA lender than you do most conventional lenders because you really have no interest in foreclosing, unless there’s a gun to your head, basically, right?
Joy Manbeck: [00:16:18] That is absolutely—that’s the last thing we want to see.
Michael Blake: [00:16:20] And in that respect, it strikes a lot like student loans. I mean, you have to work hard-
Joy Manbeck: [00:16:25] Yes.
Michael Blake: [00:16:25] … to default on a student loan on an SBA. Is that—if your business has any chance at all of becoming solvent and repaying this thing in the future, there’s a lot of rope there, isn’t there?
Joy Manbeck: [00:16:38] There’s some. I mean, we can do it three payment principal and interest or principal deferment twice during the loan. But if the borrower defaults and is just not paying, then we have no choice-
Michael Blake: [00:16:52] Sure.
Joy Manbeck: [00:16:52] … but to foreclose.
Michael Blake: [00:16:52] That’s the way the world works, right?
Joy Manbeck: [00:16:55] Yeah, absolutely.
Michael Blake: [00:16:55] It’s not a grant. It’s not free money.
Joy Manbeck: [00:16:56] That’s right.
Michael Blake: [00:16:58] So, let’s say somebody now in earshot is interested, and wants to learn, and wants to maybe take a shot at SBA loan or pursue that, what does the application process look like?
Joy Manbeck: [00:17:08] Basically, we’re going to send them a list of the items we need. We’ll ask for always three years personal tax returns, three years business tax returns, current personal financial statement, current interim profit and loss statement balance sheet. If it’s a startup, we’re going to want two years of monthly cash projections and a good business plan, solid business plan. And then, depending on the company, whether we’ll ask for things like accounts payable aging, accounts receivable aging, just depends on the structure of the company. We’ll get things like resumes from the borrower, history of the company. We’ll go out and do site visits, meet with the borrower, and we do a lot of handholding with our borrowers.
Michael Blake: [00:17:50] I imagine because a lot of your borrowers aren’t necessarily financially sophisticated in the way they’re putting those projections, and you have to teach them the language of banking, I would imagine.
Joy Manbeck: [00:18:01] Sometimes, we do. Most times, I’ll encourage them to work with their CPAs. If they’re a startup business, and they haven’t had a lot of financial experience in the past, I will strongly suggest they sit down with their CPA and go through that projection process.
Michael Blake: [00:18:16] Okay, good. Now, I’ve seen cases where, also, on rare occasion, an SBA requires a third-party appraisal or valuation of the company to be done. When does that get triggered?
Joy Manbeck: [00:18:28] On a real estate appraisal, if the loan is over $250,000, then we’re going to require a real estate appraisal if that’s our collateral. And then, if you’re buying a business, then if the amount that you’re financing, that the bank is financing is over $250,000, we’re going to acquire a third-party business valuation.
Michael Blake: [00:18:49] Okay. And how long does that application process usually take?
Joy Manbeck: [00:18:56] If we’re gonna send a preferred lender, we’re gonna do it without having to submit it to SBA, typically—and I underwrite my—all of us at Vinings underwrite our own loans. And it takes me, usually, two to three days to underwrite a loan. Our committee meet once a week. And then, from there, we issue a commitment letter. Once the borrower accepts that, then we start ordering appraisals, we engage a closing attorney, and I tell people from start to finish, usually 45 to 60 days to close.
Michael Blake: [00:19:26] Okay. And that’s a lot faster. I think most people will appreciate it. Again, I think they’re used to certain kind of banking stereotypes, and they’re used to government stereotypes as well. But in reality, you most likely will receive funding through the SBA much more quicker than you will from a venture capitalist, right?
Joy Manbeck: [00:19:44] Absolutely.
Michael Blake: [00:19:45] VC is going to be a four to six-month exercise if it’s fast tracked.
Joy Manbeck: [00:19:49] Right, sure.
Michael Blake: [00:19:52] So, are there certain—are there any restrictions on what SBA funds borrowed can be used for?
Joy Manbeck: [00:20:02] There are—we can’t loan money to pay a borrower—give money back to a borrower. Say that they’ve bought a piece of property, and they contributed a certain amount into that property, we can’t loan money to give that money back to them. We can’t loan money to have somebody invest in a business. They can buy the business if they’re going to buy at 100%, but it can’t be for a partial investment. I’m trying to think of some other scenarios that go outside the realm.
Michael Blake: [00:20:33] Well, there’s one part that I think that I didn’t know. I knew you couldn’t borrow in order to buy minority interest, but I did not realize you couldn’t borrow if it’s a majority interest, only if you’re buying 100% percent.
Joy Manbeck: [00:20:45] That is correct. You can’t just buy in.
Michael Blake: [00:20:51] In your experience, where do you think most the funds get used?
Joy Manbeck: [00:20:55] Real estate.
Michael Blake: [00:20:57] Yeah.
Joy Manbeck: [00:20:57] Yeah, because those are gonna be those bigger loans. SBA goes up to—the loan can be up to $5 million. With their guarantee, $3.750 would be their portion. So, those are always, typically, going to be bigger loans, the real estate loans.
Michael Blake: [00:21:10] So, not all SBA loans are approved.
Joy Manbeck: [00:21:17] Correct.
Michael Blake: [00:21:17] Of course, you’d love to get them all through. Especially you, you would love to get them all through. But the reality is that there’s not 100% guaranteed promising.
Joy Manbeck: [00:21:22] Sure.
Michael Blake: [00:21:23] So, one, in your experience, what percentage of applications you think make it through where the loan is actually approved?
Joy Manbeck: [00:21:31] Most of mine, if they’re not going to make it, it’s gonna be a desk turned down. Meaning, I’m going to look at it and realize it’s not going to work. Most of them we take to loan committee are approved. And then, since we’re preferred lenders, we approve it at our bank, and we just get our SBA number. So, we don’t have a lot of turn-down scenarios.
Michael Blake: [00:21:53] Yeah. You make sure it doesn’t get to that process. I’m sure-
Joy Manbeck: [00:21:56] Try to.
Michael Blake: [00:21:56] I’m sure the borrowers appreciate that too, right?
Joy Manbeck: [00:21:58] Right.
Michael Blake: [00:21:59] Much rather a quick no-
Joy Manbeck: [00:22:00] Exactly.
Michael Blake: [00:22:00] … than a long maybe.
Joy Manbeck: [00:22:01] And we try to do that.
Michael Blake: [00:22:04] What are the most frequent reasons you find yourself at that desk level saying, “We have to take a pass on this for now?”
Joy Manbeck: [00:22:12] That’s a very good question. One would be inexperience of the borrower. Somebody wants to start a restaurant, but they’ve never even worked in a restaurant, or daycare, or whatever it’s gonna be. Another is cash flow. The cash flow, the historical cash flow of the company doesn’t show that it can service the loan. And sometimes, we’ll do a projection base. They they’re going to add another city to their company, or they’re going to add people, or whatever, then we’ll look at projections. Another would be that it’s way under-collateralized, and we’re taking too big a risk there. And then, another would be trends. Maybe the companies showed some negative trends over the past few years.
Michael Blake: [00:22:53] But the good news, I think, some of those can kind of be fixed, and they can be addressed proactively. You can’t necessarily fix your history, but you certainly can kind of rework the business, right?
Joy Manbeck: [00:23:04] Absolutely.
Michael Blake: [00:23:04] So, in a way, that can actually be a very educational process because you may be—you may, for a lot of these businesses, be the first kind of professional finance person that has looked at the business in that way. And that feedback can be very helpful, right?
Joy Manbeck: [00:23:18] Sure, absolutely.
Michael Blake: [00:23:18] So, have you ever had boomerangs where you’ve said, “Look, this isn’t ready to go now,” but maybe six months or a year later, they are ready, and you wind up being able to approve them?
Joy Manbeck: [00:23:26] We have. I’ve had a few of those in my history. But usually, they tend to go another avenue. But sometimes, they’ll be back.
Michael Blake: [00:23:36] So, you hinted this before, but it’s worth kind of focusing on. If if I’m an SBA borrower, particularly, I’ve never done something like that before, is it worth hiring an accountant or an attorney? Maybe both? Maybe somebody else that can to help me through that process?
Joy Manbeck: [00:23:53] I totally would. I mean, I mentioned earlier, a CPA to help you with the numbers, with your projections, and see what’s reasonable. Also, an attorney to walk you through getting your business opened with the State of Georgia and just advice. As far as contracts, they need to have someone look at a contract with them who has legal knowledge.
Michael Blake: [00:24:18] So, one—I’m going to get to a piece of advice I often tell my clients. Boy, I hope it’s right. And that piece of advice is that if you’re declined by one bank for an SBA loan, that doesn’t necessarily mean that every single bank’s going to decline it. Is there truth to that? If bank A declined it, maybe they might come to you, and you might view that differently. Is that a valid piece of—is that a valid thought?
Joy Manbeck: [00:24:49] It absolutely is. All lenders have their own guidelines. We all have to go by SBA regulations. But different lenders have different priorities, like where—we look at a loan globally. I mean, we’re going to look at all aspects of it. Other SBA lenders only want real estate, and they want coverage of 85% or whatever. And we—most of the SBA lenders in Atlanta know each other, and we know what each other will do that maybe our bank won’t do. And I referred a number of times somebody to another bank that might look at a loan that’s gotten low cash flow to debt service coverage or collateral is way off. But yes, I mean, those are bank guidelines, as long as you’re following SBA regs.
Michael Blake: [00:25:32] And it doesn’t mean somebody is right or wrong. It can just be a comfort level of the kind of business you’re in, right?
Joy Manbeck: [00:25:37] Exactly, absolutely.
Michael Blake: [00:25:38] So, let’s take you, for example. Are there certain kinds of businesses that you just feel like you just know really well and you can really get into them?
Joy Manbeck: [00:25:46] I do. Yeah, I become a car wash lender for one.
Michael Blake: [00:25:50] You mentioned that a couple of times, yeah?
Joy Manbeck: [00:25:52] Yeah. And restaurants, I’ve done a lot of restaurant lending, daycares. So, those are industries that are sort of my area of expertise. But we do really so many different industries. So, we don’t want to limit it-
Michael Blake: [00:26:04] Sure.
Joy Manbeck: [00:26:05] … ever, so.
Michael Blake: [00:26:06] Sure. Well, what do you—besides what we’ve talked about, are there any kind of other kind of misconceptions about SBA loans that you think that the audience ought to know about?
Joy Manbeck: [00:26:19] In addition to the timing, if you work with the preferred lender, and there are other lenders that are what’s called GP, general participant, that can get the loans done efficiently. So, it’s not only at PLP lenders, but we can certainly get them done faster than the ones that aren’t PLP preferred lenders. The other thing is paperwork. Well, like I say, we do a lot of handholding. We try to complete as much of the paperwork as we can, our processing department. So, a lot of people shy away from it because they think it’s just gonna be tons of paperwork. So, that part, I think, in the past was more true than it is now.
Michael Blake: [00:26:57] I’m gonna go off the script a little bit because I thought of a question I can’t resist asking. You might not be able to answer. If you can’t, that’s fine. We’ll move on. But I’m curious, is there a favorite borrower that you’ve had that just took an SBA loan and just did fantastic things that sort of stands out? Maybe built a car wash empire or something like that?
Joy Manbeck: [00:27:18] It’s funny you should mention that because I learned—I did a 504 loan. That’s the loan that you can only do real estate and fixed assets. It was probably three years ago. He probably had 2.5 into the whole thing. Two years later, one of the big car wash franchises came and offered him $7.5 million for it. And so, now, we’re doing another one for him.
Michael Blake: [00:27:41] Wow!
Joy Manbeck: [00:27:42] Yeah.
Michael Blake: [00:27:42] I’d say he’s a good risk.
Joy Manbeck: [00:27:43] He is. They did everything right. So, good borrowers.
Michael Blake: [00:27:47] Well, this has been great. There’s a whole lot more knowledge that I know that you have. And if someone wants to think about working with you, and they’re getting the sense that I already know. I mean, you’re just a great person to work with.
Joy Manbeck: [00:27:58] Thank you.
Michael Blake: [00:27:59] So, if somebody wants to contact you to learn more about if an SBA loan is right for them or not right for them, how can they do that?
Joy Manbeck: [00:28:07] Probably the best thing is the e-mail address, which would just be jmanbeck@viningsbank.com. And I can spell that out if you’d like me to o-.
Michael Blake: [00:28:16] No, I think Vinings Bank, I think, is fairly self-explanatory.
Joy Manbeck: [00:28:20] Okay.
Michael Blake: [00:28:20] And if they can go the website, they’ll see the spelling. So-
Joy Manbeck: [00:28:22] Absolutely.
Michael Blake: [00:28:23] Okay. Well, that’s going to wrap it up for today’s program. I’d like to thank Joy Manbeck so much for joining us and sharing her expertise with us. We’ll be exploring a new topic each week. So, please tune in, so that when you’re faced with your next business decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcasts aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.
