Empowering Small Trades Businesses: A Conversation with Live Oak Bank
In a recent conversation between Dan Dowdy and Brandon from Live Oak Bank, they explored the bank's various services to help small businesses in the trades industry grow through leadership development. Live Oak Bank specializes in providing small loans to plumbing, electrical, and HVAC businesses using the Small Business Administration's (SBA) 7A loan program. This program enables financing based on the cash flow of the company and the owner's credit, making it an excellent option for businesses with limited collateral.
Unveiling the Potential of 7A and 504 Loans:
During their discussion, Brandon highlighted the different types of business loans, focusing mainly on the 7A and 504 loans. The 7A loan, their main product, offers 100% financing for buying a facility, making it highly appealing for existing business owners in operation for 12 months, as it requires no down payment. Conversely, the 504 loan involves a 10% down payment and comprises two loans with generally lower interest rates.
The Allure of the 7A Loan for Real Estate Deals:
Brandon revealed that most real estate deals at Live Oak Bank involve the 7A loan and for good reason. The allure of 100% financing and no down payment requirement for eligible business owners proves highly beneficial. It enables businesses to replace their rent with a mortgage payment while retaining cash on their balance sheets for future investments.
Long-Term Stability with 25-Year Fully Amortizing Term:
One of the attractive features of the 7A loan is the 25-year fully amortizing term, meaning there are no balloon payments to worry about. This extended repayment period gives businesses financial stability and predictability, allowing them to focus on their growth and expansion.
Being Proactive in Business Acquisitions:
As the conversation progressed, proactively understanding the costs and requirements of acquiring a business was emphasized. Brandon advised potential business buyers to plan, including preparing for the down payment and evaluating financial aspects like credit scores and licenses. This approach ensures a smoother acquisition process and avoids last-minute surprises.
Building Strong Relationships with Banks:
Dan and Brandon underscored the significance of building strong relationships with reliable banks. Working with a trusted bank, like Live Oak Bank, provides businesses with essential guidance and financial support, facilitating growth initiatives such as marketing, hiring, and purchasing equipment.
The Art of Business Management:
Throughout their discussion, various aspects of business management were explored, including leadership, talent retention, and strategic planning. Brandon highlighted the value of being proactive, understanding the financial and qualitative aspects of running a successful business. Having a clear vision and strategy, business owners can confidently navigate the challenges and capitalize on growth opportunities.
The Role of Mentors and Advisors:
Lastly, the conversation touched upon the benefits of having mentors or advisors, such as Brandon, who can offer valuable insights and guidance in business financing and growth. Having someone experienced by your side can make a significant difference in making well-informed decisions for the business's long-term success.
In the dynamic world of small business ownership, access to reliable financial support and valuable guidance is paramount. Live Oak Bank's commitment to empowering small trade businesses through its specialized loan programs is evident. By being proactive, understanding the financing options available, and building solid relationships with trusted banks, small business owners can confidently pursue growth initiatives, embrace leadership opportunities, and achieve long-term success in their chosen trade industry.
