The first program is the Community Express Loan Program through Business Loan Express (“BLX”). Here are the facts on this program per the BLX web site:

1. Agency Access: Maryland Small Business Development Center [refer to the website of www.mdsbdc.umd.edu/ for the nearest SBDC office to you].

2. Lender: Business Loan Express, Panama Beach, FL.

3. Communities Served: Minorities, Women, Veterans, and Low to Moderate Income Areas, Hub Zones and other SBA designated areas.

4. Specifications:

• Loan amounts of $5,000 up to $50,000 in even $1,000 increments.
• 7 year amortizing term loan—Unsecured (no collateral).
• Interest Rates: (1) Prime + 4.75%, adjusted quarterly for loan from $5,000 to $25,000; and (2) Prime + 3.75%, adjusted quarterly for loans from $26,000 to $50,000.
• No prepayment penalty
• No tax returns documentation requirement from the borrower or guarantor (The company is the borrower & the owner is the guarantor.).
• $350 processing fee (but will not be charged until the loan is approved and is deducted from the funded loan proceeds on date of funding)
• U.S. Small Business Administration (“SBA”) Guarantee Fee equal to 2% on the guaranteed portion of the loan (85%) will be deducted from the funded loan proceeds.
• Loan Payments are auto drafted from the borrower’s company bank account.
• Start-up businesses are eligible for this financing.
• All industries are considered.
• Credit Score Hurdle Rates: At about 620 for a $25,000 loan with no priors past dues and in the 700s for loan requests over $25,000.

5. Eligibility Issues:

• Franchises must be on the SBA approved Franchise Registry (www.franchiseregistry.com/registry/).
• Loan funds for Business Acquisitions are not allowed. What is permitted is a working capital loan for the acquired business after the acquisition has been completed.
• Liquid Assets (e.g., cash in checking accounts, savings accounts, CDs, stocks, bonds, etc.) of the individual company owner cannot exceed $100,000 (does not include IRAs or other retirement accounts). 
• BLX utilizes the Fair Isaac Credit Score System, which evaluates the credit score of the applicant and the company’s industry data into its own formulated scoring system. Current and recent past due accounts and collection accounts will have a very negative affect on the borrower’s formulated BLX Score and the loan decision.

6. Ineligible Businesses:

• Agricultural and farm businesses (growing crops)
• Fishing and Shore operations
• Medical facilities (including nursing homes and ALFs)
• Mines (including sand and gravel pits)
• Applicants doing business in a foreign country
• Businesses engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting
• A business with any products or services of a sexual nature

7. The Process:

• Application submitted by a Technical Assistance (“TA”) Provider (such as the Maryland Small Business Development Center)
• A speedy approval or denial by email is assured within 48 hours of electronic application submittal.
• The Borrower is required to show that he/she has 10% of the funds and the loan represents 90% of the needed total capital. For example, under the BLX mode of calculations, for a $25,000 loan you will need to show at least $2,780 in your company bank account.
• You must have a registered company, Fed ID #, and a company bank account to apply for a BLX loan.
• Upon approval of the loan, a BLX Commitment Letter and Closing Documents are sent to the TA Provider or the Borrower.
• Signed Commitment Letter and Closing Documents are returned to BLX by the Borrower.
• Funding occurs after BLX receives the required TA Certification Form from the TA Provider. The TA Certification Form specifies the Borrower’s agreement to utilize the technical assistance from the TA Provider, the Borrower’s prioritized coaching services he/she will pursue from the TA Provider (e.g., financial management, inventory control, budgeting, accounting, international trade, etc.). NOTE: It is my experience that funding occurs within two weeks after BLX approval.  
• The 84 monthly loan repayments are made by BLX’s debiting of the borrower/company’s bank account.

8. Advantages of the Community Express Loan from BLX:

• Fully amortized loan, which means a lower monthly payment (e.g., on a $25,000 loan at Prime of 8.25%, the monthly payment is approximately $455 per month).
• No Access Fees per transaction
• Establishing your business credit
• Customer service/fast turnaround
• Simplified 3-page loan application form
• No tax returns and no personal financial statement documentation required by the lender
• Access to financing with no collateral requirements
• Financing for start-up companies
• A competitive rate for “unsecured” loans of this nature

9. Disadvantages of the BLX Loans:

• White males, who are not Veterans or do not live in a low to moderate income area, Hub Zone or other SBA designated area are not eligible. [However, I have al alternative source for you from Superior Finance in my next feature article].
• Applicants are approved or denied on an “all or nothing” basis, which means that if you are applying for a $25,000 loan and are denied, you cannot expect an approval for a lesser (e.g., $15,000) amount. [I have 2 alternative sources that do supply a lesser amount if you do not qualify for the full amount of financing requested in my 2 next articles].

 
Author: Anthony Ruiz, MBA/JD, MDHCC Vice-Chairman; Regional Director, MD SBDC Capital Region [Website: www.capitalsbdc.umd.edu;
Email: aruiz@mdsbdc.umd.edu].