Revolving Loan Fund Programs
Q: What are the advantages of using a Revloving Loan Fund (RLF) for my project?
A: An RLF loan fills the gap created if commercial financing cannot fund an entire project. It also offers lower interest rates and no prepayment penalties.
Q: Can HCBI finance my entire project?
A: No. the most that HCBI can finance a project is 50% of total project costs. We are a subordinate lender to the bank. The purpose of HCBI's loan funds is to fill gaps between commercial financing and owner cash.
Q: Will I be required to write a business plan?
A: Yes. A Business plan is an extremely useful tool for small business. It provides a roadmap of how the project will impact the business. HCBI offers assistance in writing your plan and financials.
Q: Is your lending criteria similar to a bank?
A: Yes. A business must also meet the same credit and collateral standards that a bank would have in order to be funded through an RLF.
Q: Must the project have owner capital?
A: Yes. The program requires the small business to have at least 10% of the total project cost in cash or equity.
Q: Are there fees associated with the loan programs?
A: Yes. There is a $250 non-refundable application fee. If the loan is approved, there are some legal fees and processing fees. HCBI business members will receive a discount on fees.
Q: What cannot be funded?
A: Refinance of existing debt, any project cost incurred prior to submitting an application, and certian types of businesses.
Q: How much money will I need to get started?
A: This will depend on the type of business you would like to start, the purchasing price of your location, materials, marketing, utilities, and the amount of equity you have available. One of the most important first steps in starting a new business venture is knowing the amount of money needed to get started. An accountant can be very helpful in figuring out totalk project costs with all things considered.
Q: What is a business plan, and do I need one?
A: A business plan is an essential tool created by an entrepreneur to demonstrate their potential ability to compete in the business world. It is essentially a document that describes the entrepreneur's vision of the business in mind. It includes basic information such as location, name of the company, and contact information. It also includes an overall mission statement as well as a statement of purpose, a description of the business's products or services, a market analysis, a management and personnel plan, and an operational and financial plan or projections. It is highly recommended that a business owner creates a business plan in order to force the owner to think through all of the aspects of starting the business. It will aslo serve as a financial proposal to help the owner obtain necessary financing.
Q: What part of my business plan should I start with?
A: Start with what you know. Some areas will be easier to complete than others. For example, if purchasing a pre-existing business, the location will obviously already be known. Generally, a business owner will be able to easily describe the product or services they wish to sell. This can be done relatively quickly in comparison to, say, the financial projections which can involve extensive research of the market and competition before being completed. It is also recommended that the mission statement and statement of purpose be skipped until the rest of the plan is complete. This way, much like a term paper where you write the introduction and conclusion last, you will know exactly what information you will be summarizing and eloquently put that information into a brief paragraph.
Q: What is a market analysis?
A: Simply put, this is a description of the industry you are entering. It will include information such as the size and needs of the target market and potential customers. It could include area demographics and cyclical trends that could affect your business.
Q: What is a tax ID (TIN) number and do I need to pay fees to aquire one?
A: This is a number which is used to identify entities for tax-related purposes such as filing tax returns or other actions such as opening a bank account. For businesses, its TIN is the same as its Empoloyer Identification Number (EIN). You do not need to pay any fees to acquire your TIN, though many online sites may try to trick you into paying.
Q: Can I get a grant for my start-up?
A: Unfortunately, it is very rare for a for-profit business to recieve grants. It is easy to search for grants advertised to specific types of startup entrepreneurs, but unfortunately there will likely be a catch to them. Be sure to watch out for scams. If you find a grant and would like HCBI to check its validity, we would be happy to do so. In most cases, however, it is best to assume that grants do not exist, because even if they do, it may takes years to see any of the money.