Question:

I have worked in the childcare industry for many years. I am now interested in purchasing a day care center. I have found a center I wish to purchase in another state. Because of my 25 years of managing day care centers, will SBA look favorably in trying to obtain a loan with me as a semi-absentee owner?

Answer:

Excellent question!

The SBA requirements have become far more rigid in the past few years regarding the borrower’s prior experience to be certain they have the background to operate the business.

In fact, a senior executive at an SBA preferred bank told me that an SBA audit two years ago determined that a lack of relative experience by borrowers was the single biggest factor in bad loans. Since then they have tightened up their requirements and rightfully so.

In your case, there is no doubt that your past experience is an excellent fit for the type of business you are looking to pursue. However; there may be concern if you do not intend to be the full time operator.

This is something that you will want to discuss with the individual lender as their specific criteria may vary.

Personally, I think you are far better off to operate the business full time for at least the first 6 months and then consider hiring a manager.

As you probably know,

the SBA does not lend money. They simply guaranty a portion of the loan made by lending institutions. While there are specific SBA criteria so too will each lender have its requirements

. That’s why you may need to approach a few different SBA lenders. On this point, try to work with a “Preferred SBA lender”, as they can process your loan quicker and more efficiently.

If you’d like to learn more about the SBA’s 7(a) program, here’s a link to their website: http://www.sba.gov/financing/sbaloan/7a.html