Small enterprise Interview - Patriot Express Loans to Veteran-Owned Businesses - Are They Working?
Editor's note. This is an extract from an interview with an Sba small enterprise loan provider, relating to the program known as U.S. Patriot Express. This program is for enterprise loans available to veteran-owned ventures (active duty assistance members, veterans, and their widows and spouses), either start-ups or existing businesses. The purpose of this interview is to get a real, in the trenches, view of how the program works from someone who does it every day. Does it is categorically benefit our veterans?
Excerpts of Interview
Us Patriot Express Loan Program
Q. Greetings, and thank you for giving me the opening to speak with you.
A. My pleasure.
Q. I would like to begin by focusing on the U.S. Patriot Express Initiative Loan Program. Fancy title, but what is it exactly?
A. It's a long winded way of saying the Bush administration came up with a vet loan program for enterprise owners. These are loans for veteran-own enterprise owners. The funding comes from private lenders and banks that are licensed with the Sba. As an incentive for the lenders to make the loan, they are guaranteed for default, namely are reimbursed 85% of the value of loan. I have to tell you, this makes a big inequity because it categorically motivates the lenders. It gets them off the dime and makes them more willing to open up their coffers.
Q. So the money doesn't come directly from the Va or the Small enterprise Administration?
A. Right. The Va isn't complex in loaning the money. However, they are huge supporters of the program. The Sba directly loans taxpayers monies only under its disaster program. In this program the Sba approves the lenders and guarantees the defaults. private banks and lenders categorically loan the veterans the money.
Q. But it is called a Sba guaranteed loan program. Doesn't that mean the approvals would be guaranteed if you're a veteran?
A. I wish that was the case. It's not the approvals that are guaranteed. If you make a small enterprise loan and don't make your payments and it goes into default, the bank has to alert the Federal government and after taking varied steps and attempting to collect, the bank will eventually get paid 85% of the loan value. The Sba certify acts like an insurance policy to the lender; they certify the 85% to the lender who makes the loan.
Q. So the veteran doesn't get any extra consideration in the approval loan process?
A. By law, the lender has to use their usual, customary, and economical prestige retell practices that are used for both approved and Sba enterprise loans. But let me cut right through all of this. It depends a lot on the lender. We are pro "veteran small businesses" and will try everything to make the loan. Way before this program became politically popular in June of 2007; we were development lots of loans to veterans and trying everything in our power to say "yes." They just have to meet us half way, with more clear than negative on personal credit.
Q. Ok, so far so good. Because of 85% guarantee, doesn't that mean the vet applicant only has to put up 15% collateral because the rest is secured by the guarantee?
A. Unfortunately, it does not work that way. First, most of my small enterprise loans are unsecured and so we don't even ask about collateral. You're not describing your equity in your house, the value of your trade fixtures, or anything else. There are simply no liens on property. For larger loans collateral will be required and in today's market, it will usually be real estate.
Q. Do they check the personal or enterprise prestige of the applicant? I consideration that there are a lot of online businesses that claim you can get enterprise prestige without using your personal group security number. Will that work in this case?
A. Unfortunately, the lenders in most cases only check your personal prestige article through Experian, TransUnion, or Equifax. There are companies out there that promise to get you a enterprise prestige card or unsecured small enterprise loan only using your taxpayer Id amount and not your group security number. Be careful. Although there are people who have been successful, there just as many who have failed doing so. And it takes a lot of time, because you have to create prestige in the enterprise name first and then make the bank application.
Q. I'm an adult and you can tell me like it is. What is the minimum prestige score required?
A. These soldiery loans are not like applying for a prestige card. They rarely base the decision solely on your prestige score. They look at the whole prestige report. As to that report, they look at: 1) your prestige paying history back seven to ten years, 2) the current status of your accounts, 3) the amount of accounts, 4) the ability of the accounts . . .there's a big inequity in the middle of a Capital One prestige card and platinum American Express, 5) how long you have had the accounts, 6) matters of group article such as judgments and tax liens, 7) enquiries, and how 8) how high your prestige card balances are.
Q. Who can qualify for these loans?
A. The good news is it applies to a lot of individuals. You can be a veteran, current active duty assistance personnel in the Tap program , assistance disabled vet, in the support component's or National Guard, or the spouse or widow of any of the above. And if you are the spouse of a veteran, you can apply in your own name. You do not have to be a combat veteran. All you need is your honorable dismissal papers which are in the form of a Dd 214.
Q. Can any small enterprise qualify? I mean, can it be everything from raising chickens to developing software for weapons control systems?
A. It's funny you should say that, because I have done both of those. There are very few categories that make you ineligible, along with multi-marketing, speculative real estate, gambling activities, your own private investments or self-owned real estate, to name some of the bigger exceptions.
Q. All right, we have some of the basics under our belt. How much can you apply for?
A. They go everywhere from ,000 to 0,000. I specialize in the smaller Patriot Express ones from ,000 to ,000, which do not wish any collateral. Above that will wish security. In the good ol' days about a year ago, the bank's determined using your trade fixtures or enterprise personal property. Then when the economy got worse, they started requiring some form of real estate equity. Now most of them are requiring 100% real estate equity, which is getting tougher in these times because the value of people's homes is falling.
Q. Well that's easy. Since I am a vet, I want the full ,000.
A. I am with you, but remember you have to qualify for that amount, which is why you get to settle on how much money you would like to borrow and then all of the key components of our prestige matrix system is matched to your request. We always try to loan you for the highest amount, but you must qualify for it.
Q. What is this going to cost me? What are the monthly payments and interest rate?
A. Although it is a tough time for credit, it is a great time for low payments. Currently a smaller Patriot Express loan is at a four year interest low of 7.75%, which equates to per ,000 borrowed. These are ten year fully amortized, important and interest loans. Because there is no prepayment penalty, you can pay them off early and stop the interest.
Q. So the payments can go up?
A. The smaller unsecured loans are changeable and not fixed. But because the payments are spread out over such a long period of time, as interest goes up, there is not a precipitous increase in the monthly payment. Historically, they started out six years ago at per ,000 borrowed and are now down to .00.
Q. Under your Patriot Express Initiative loan program, do I have to put up the equity in my house or have liens on my enterprise assets?
A. Not at all. They are 100% unsecured small enterprise loans. As a matter of fact, they don't even ask you to list or retell your assets.
Q. I'm in the process of finishing my enterprise plan. Can I submit the application without one?
A. You can. It is not required. On the other hand, it helps. So I tell people if they are a join of hours away from finishing their enterprise plan, by all means do so. It is beneficial to have even if you do not apply for the loan. But if it is going to take you two or three weeks, don't sweat it, and simply send in the application. We can always work on the enterprise plan later.
Q. How long will this take, from start to finish?
A. The larger loans take longer because there's more paperwork and more retell required by the lenders. But the small ones I do are extremely quick. You can usually get answers within 24 hours and is wired into your enterprise inventory within approximately ten days with the completed paperwork. We have extra software that allows us to expedite the process. And, the program mandates a quick issuance of an Sba loan amount from the central processing center -- so once everything is finished, you can usually get an Sba loan amount within one or two days and then the money is wired.
Q. Do most banks do these types of loans?
A. Any bank that is already popular ,favorite by the Sba is able to do these loans. But the sad fact is that most banks do not do them. I've even run into lenders who have never even heard of the program. They will simply run you through their application process without concentrating on the fact that you're a veteran. We are veteran kindly and encourage these applications.
Q. Before this interview, I didn't categorically know what a patriot loan was. How come it has taken this long to hear about this loan?
A. The plain fact is it is I run into veterans all the time that have never even heard of the program. What a shame. It is here for our soldiery - and we need everyone to help get the word out.
Q. If my prestige is not very good, can I use a co-signer?
A. Unfortunately no. On the other hand, anything with a 20% or more interest in the enterprise will fill out the application and have their prestige checked. But bear in mind you have to have at least a 51% or more interest from veterans to qualify.
Q. What happens if I have gone through bankruptcy? Have I shot myself in the foot?
A. We have applicants all the time that have worked hard after bankruptcy and have their prestige score in the high 600's. Some banks won't touch you but we will. We wish that you desist the bankruptcy, wait approximately 6 to 8 months after that to re-establish credit, and show that you're paying your bills categorically on time after that. This means you can't go on an "all cash loans, but not on the small ones. The paperwork is meant to be short and simple so they can be processed quickly.
Q. Do you have to join or form an Llc?
A. Not all. You can be a sole proprietorship. The nature of the enterprise is not one of the factors in development the prestige decision.
Q. I have a good prestige score and do not want any more enquiries which bring down my score. Is there anything I can do?
A. That is a specific problem. We have to pull your personal prestige article it is mandatory. On the other hand, my staff can give you a general idea of your chances if we know your prestige score. That way you'll not be disappointed.
Q. Do you find that the vets you deal with like the program?
A. They categorically love it. For good reason, they have put their lives on the line and they feel entitled to a fair shake in starting or expanding their business. They are grateful there is a program out there for them.
Q. You have any inside suggestions as to how someone can increase their chances?
A. Sure: The following categorically helps: 1) a enterprise plan with financials. Financials are the most foremost part. But I also tell people that you're not trying to get an "A" on a term paper. Just do a good basic job and trying for a "C+". 2) Tell them exactly what you're going to be spending and on. Just saying that you needed it for cash loan. 3) A well written letter with the application that categorically describes the store and your hereafter plans. Please proof read it; a poorly written letter could back fire. Recently, we received one with fourteen typos in one sentence, that one is the winner!
Q. Are some businesses determined more risky?
A. Yes, but we are still able to fund them. For example restaurants and dry cleaners are determined more risky as a follow of Federal studies.
Q. Are you looking more people are inclined to go into enterprise themselves as opposed to working for someone else?
A. No demand on that one. The days are gone when our adults are employed in factories, large corporations, and government offices, sometimes working for only one manager their whole career. There has been a gigantic unleashing of such persons because of our lack of jobs, and many of them are out in the private sector trying to start their own businesses. It's both sad and appealing at the same time. For this reason, the Sba must furnish more loans to the 27 million small businesses that can fuel our economy.
Q. Now let us talk real practicality. We are in a prestige crunch like never before. How has this affected your success rate?
A. You hit the nail on the head. We are right on in a prestige crunch, and I am looking the lenders requiring good prestige reports. Fortunately, we are not complex in the toxic sub-prime mortgage fiasco and have funds to loan. But remember they are supervised by the Sba and the big question is the secondary store has shut down. Although this makes it more difficult, but we are still very veteran kindly and give extra consideration to them. We continue to loan to veterans, any a day, and plan to do so in the future
Q. Overall, how would you rate the program?
A. It's a great and well-deserved program. If I were to enhance it, I would increase the outreach so more veterans knew about it.
Q. Thank you for your time.
A. My pleasure.
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