Author Archives: Pango Blogger

Pros and Cons of SBA Loans

Pros and Cons of SBA Loans

Part of our series on the top funding methods for small business.

With backing from the federal Small Business Administration (SBA), SBA loans are popular among newer small businesses—especially those that might not qualify for more traditional kinds of funding. The SBA was created in 1953 as an independent agency of the US government.

The government does not provide the actual loan funding to the small business borrower. Instead, the SBA underwrites (i.e., guarantees) the loan and leaves the actual funding and servicing to a private financial entity such as Pango Financial. SBA-backed loans are among the most popular funding choices we offer.

Reasons to choose this option include:

  • Accessibility: You can get an SBA loan even if you lack the collateral or track record to qualify for more traditional funding.
  • Amortization: Most SBA loans don’t require a balloon payment when the term ends; you can head off a potential future cash flow squeeze by structuring the amortization schedule to align with your business.
  • Little or no down payment: You won’t have to come up with a sizeable chunk of the capital you’re looking to borrow.
  • Terms: You can adjust repayment terms to provide financial breathing room if your cash flow requires it.

From a repayment perspective, the small businesses that typically take advantage of SBA loans are riskier, at least on paper, than more established borrowers. This is reflected in the loan’s cost as well as the process for getting approved. Watch for these potential downsides associated with an SBA loan:

  • Red tape: The paperwork and processing time for an SBA loan can exceed the alternatives. If you need quick easy turnaround, this might not be your best bet.
  • Higher interest: Most SBA loans come with a higher interest rate than other financing. So in the end, you’d pay more total interest than with a different kind of funding—even if the loan came with a longer term and lower monthly payments.
  • Personal guarantee: If you own 20 percent or more of your business, SBA will likely require you to personally guarantee that payments will be received on time. This places additional pressure on you to fulfill the terms of the financing contract.

So weigh this option carefully. If you’d like to learn more about an SBA-backed loan for your small business, visit Pango Financial or call 1-855-WHY-PANGO (1-855-949-7264). Our specialists will take the time to walk you through the variables and help you determine if an SBA loan is right for you.

Pros and Cons of ROBS plans

Part of our series on the top funding methods for small business. With a Rollover for Business Startups (ROBS) plan, you can fund a new business by leveraging funds intended to fund your retirement—either a 401(k), an Individual Retirement Account (IRA) or similar IRS-approved account. Unlike a business loan from the Small Business Administration (SBA)… Continue Reading

Your Retirement Dollars Could be the Key to your Dream of Business Ownership

The stock market has had its ups and downs. Many people are expecting that at some point soon there will be a correction in the market. Are you seeking other alternatives to invest your retirement savings? Are you burned out from corporate life? Did you know that tax deferred retirement accounts can be invested in… Continue Reading

Is a C Corporation right for you?

Is a C Corporation right for you?

If you’re considering starting a new business, or growing an existing one, you could gain significant advantages by structuring it as a C corporation. Compared with other common IRS-designated structures, like a sole proprietorship or Limited Liability Company (LLC), a C corporation can pay less in federal income tax—allowing the owner(s) to retain more revenue.… Continue Reading

Join the Pango broker-partner team

Join the Pango broker-partner team

At Pango Financial, we help entrepreneurs secure the funding they need to embark on the dream of business ownership. While we serve a wide range of aspiring and existing business owners, a large segment of our universe includes franchisees. Not surprisingly, many of our clients are also clients of business brokers—especially those who specialize in… Continue Reading

6 tips to keep your credit clean

6 tips to keep your credit clean

Most factors that influence your credit score are obvious: a slow payment history, for example, or a bankruptcy can lower your score and render your loan more costly than it needs to be. But some factors are less well known. Find out what hidden factors can cause your credit score to be lower. The formula… Continue Reading

Cost-cutting for small businesses

Cost-cutting for small businesses

It’s not exactly news: the success of any business, regardless of size, depends on two often competing priorities: to keep revenue flowing and minimize costs. It’s not always easy to strike a balance between the two. Many small business owners find themselves focusing more on the first than the second at times. That’s understandable, especially… Continue Reading

Which financing options are best for your business needs?

Which financing options are best for your business needs?

If you’re planning to establish, buy or expand a business, Pango Financial offers a wide range of options to provide the funding you need. You can take advantage of these options individually or in combination to create a comprehensive financing package that fits perfectly with your long- and short-term goals. Our financing options include: DreamSpark… Continue Reading