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Financing options for small businesses

Too many businesses fail because they're undercapitalized. But this certainly doesn't happen because there's not much capital available.

Money's there. You just need to know where to find it and what kind of loan is best for your business.

Discovery Bank offers a broad range of loans for small- to medium-sized businesses that cover virtually every business need. From buying new equipment, enlarging or renovating a building, adding inventory, or buying fixtures and furniture, capital is available on flexible terms at an affordable cost.

Like other banks, Discovery Bank offers conventional term loans, lines of credit, commercial real estate loans and construction loans based on your business' cash flow, profitability and net worth.

But there may be times when you need to be not-so-conventional in your financing approach. Consider something innovative, for example, like an asset-based loan, which uses current assets (receivables and inventory) or fixed assets (equipment and real estate) as collateral.

Discovery Bank will lend up to 80 percent against eligible accounts receivable, up to 50 percent against eligible inventory and up to 100 percent of the liquidation value of machinery and equipment as determined by an appraisal.

You can apply the proceeds to working capital, debt restructuring, mergers and acquisitions, equipment purchases, seasonal cash shortfalls, leveraged buyouts and real estate acquisition/expansion.

If your business' financial profile is a better fit for a government-guaranteed loan, Discovery Bank can open the door to two of the Small Business Administration's most popular programs: 7(a) loans and 504 loans.

Of the two, 7(a) loans are the most basic and widely used, providing capital for small businesses that might not be able to secure financing on reasonable terms through traditional bank loans. 7(a) loans can be used for most business purposes, including working capital; buying real estate for business operations; construction, renovation, or leasehold improvements; acquiring furniture, fixtures, machinery and equipment; and expanding inventory.

The current maximum 7(a) loan amount is $2 million. Or if you're thinking of buying, building or remodeling a commercial or industrial building, SBA's 504 loan is definitely worth a look.

Its big attraction? A fixed, below-market interest rate and a low down payment of only 10 percent.

The 504 program is rather unique in purpose: It's earmarked specifically for projects that will create jobs or meet a specific community economic development goal. Not all business expansions meet these criteria, but if yours does, 504 is tailor-made.

A special plus for an SBA loan through Discovery Bank is quick turnaround time. SBA has designated Discovery Bank as a Preferred Lender, enabling rapid processing and approval - often 36 hours or less - of SBA applications under simplified procedures.

Borrowers may also benefit from SBAExpress, an even more streamlined program with reduced documentation requirements and speedier approval times. Loan amounts through SBAExpress typically are in the $50,000-$250,000 range.

So no, there's no shortage of money out there. The real challenge is sorting through what's available to find the right one for you.

That's where the professionals at Discovery Bank come in. Think of us as business consultants who'll learn your business inside and out, then recommend the best way to secure the capital you need.

Learn more about business financing options by calling Discovery Bank in either San Marcos, at (760)736-8900, or Poway, at (858)413-4300. Or visit us on the World Wide Web at www.discovery-bank.com.

Submitted by Discovery Bank

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