|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Benefits of Small Business Administration Loans
|
|
|
BY STEVE DINNEN
A full-service restaurant in Urbandale plans to bolster its business with a $1.67 million investment. A child care center, also in Urbandale, will grow with a $1.39 million loan, while a longtime Des Moines accounting firm will spend $1.6 million on an office. These are just three of the recent round of loans to Central Iowa businesses that are backed by guarantees from the U.S. Small Business Administration—$8.3 million in September alone (and $21.2 million statewide).
There could be an SBA loan waiting for you. But first you have to ask. And you have to understand how
they work. For that, we turned to Jim Langin (pictured above), of Pivotal Business Partners, and Evan Muench (pictured below), of HL Lender Resources. They and their West Des Moines firms specialize in guiding both borrowers and lenders through the process.
|
|
|
According to Langin, SBA loans come in two forms, the 504 and the 7(a). The 504 is meant to finance real estate and heavy equipment purchases. The more common 7(a) is intended for working capital and can be used for startup funding, business acquisition or even debt refinancing.
Borrowers have to meet basic requirements such as being a for-profit firm, with equity in the business, and meet size requirements. If they are large enough to have in-house staffers with familiarity of the SBA loan process, lenders will do their own underwriting of a loan, while smaller banks may turn to advisers such as Langin and Muench for guidance.
(Langin noted that HL was founded by two top Iowa SBA officers—one of them was his father, John Langin—so they have deep roots in the SBA world.)
Lenders see an SBA loan as a useful tool, Langin said, because it “allows them to do things their loan policy won’t cover.” That might include the lowered borrower buy-in on a 504 loan, which typically is structured so that the borrower puts up 10% of the needed funds, just half the amount a non-SBA loan would require. So that ties up less of the borrower’s money. A borrower on a 504 loan also benefits by locking in a fixed interest rate for a portion of the loan, for as long as 25 years.
The current interest rate on a 504 loan with a 25-year payback is 6.529%. A 7(a) loan costs prime—currently 7%—plus 0.5% to 2.25%, for 7.5% to 9.25%.
|
|
|
|
|
|
|
|
|
It's Time to Cash In Those Savings Bonds
BY STEVE DINNEN
A friend mentioned the other day that he had found some U.S. Savings Bonds that friends and relatives had purchased for his children, gathering dust in a lock box. They used to be a fairly common gift, often to mark the birth of a child or a birthday.
His children are now in their 40s. So those Series EE bonds have long since quit accruing interest, which ends after 30 years of ownership.
Series EE Bonds are bought at half their face value, e.g.,, $50 for a bond valued at $100. They reach that face value in 20 years and still accrue interest until they hit the 30-year mark.
The
other type of savings bond, Series I, is bought at face value and builds from there, also for 30 years. It's superior to the EE, since one of its two value-building components is tied to the rate of inflation. The current rate on Series I Bonds, available through April 2023, is 6.89%. (The current rate on Series EE bonds is 2.10% through next April.)
So, friend, dust off those matured bonds and cash them in—most banks will oblige. Then go to treasurydirect.gov, the only place to buy bonds these days, and use that cash to grab some I bonds. The annual limit is $10,000, though you can buy $10,000 more if you own a business, or another $10,000 if you have a living trust. Married? Double those amounts.
|
|
|
|
|
|
|
|
|
You Maxed Out on Your Roth IRA. Now What?
BY ARDEN RODGERS FOR INVESTOPEDIA
Suppose that you’ve contributed the allowable maximum to
your Roth IRA for the year but still have money left over to stash away for retirement. That’s a problem that a lot of people probably wish they had. And never fear—there are plenty of other good places to put your money.
While it’s hard to top the growth and withdrawals that a Roth IRA offers, you’re limited to contributions of $6,000 if you’re under age 50 or $7,000 if you’re 50 or older in 2022. For 2023, these numbers rise to $6,500 and $7,500, respectively.
Any additional money that you want to save will have to find another home, ideally one with at least some of a Roth IRA’s tax benefits. READ MORE.
|
|
|
|
|
|
|
|
|
Is Now a Good Time to Refinance Your Mortgage?
BY LESLIE COOK FOR MONEY With interest rates hovering around 7%, most homeowners will find that now is not a good time to refinance their mortgage. There are fewer than 200,000 borrowers who could benefit from a rate and term refi at today’s rates, according to real estate data company Black Knight. We’ll help you figure out if you’re one of those homeowners who can still benefit from a refi and walk you through what you need to consider before taking that step. If you decide that now is the right time to refinance, shop around the best mortgage refinancing companies to find the right fit for your needs. From the timing of charitable donations to the unloading of money-losing investments, there’s still plenty you can do to reduce your taxes for this year. Here are key factors to consider before it’s too
late. If your current mortgage rate is above 6.61%, refinancing might make sense. However, if your current is lower than 6.61%, refinancing is probably a bad idea right now. READ MORE.
|
|
|
|
|
|
|
|
|
dsmWealth's Suggested Reading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Publications Corporation Inc.
Copyright © BPC 2021, All rights reserved.
Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited.
|
|
|
|
|
