Two businessmen published a book about business coaching and were planning a national tour to launch the book. They did not want to simply sell the book on Amazon. Their business plan centered on in-person coaching events where they could teach the principles of their book and have in-depth interactions with their intended audience. They believed these events would not only help to market their book, but offer participants a lot of value, further generating word-of-mouth and other exposure.
Just as they prepared for the book launch, the COVID-19 pandemic hit the country. Social distancing measures were put into effect and many public gatherings were prohibited. None of the in-person events they had planned for the roll-out in 2020 could move forward.
The marketing plan would be delayed for at least one year until the pandemic conditions became more stable. But, the businessmen had already had gotten a loan of nearly $1 million dollars secured with their personal real estate to fund their initial start-up expenses, self-publishing the book, inventory, and event planning.
Their lender had worked with them to modify their loan, but opportunities to generate revenue from the book were limited, leaving less income to repay the loan at the present time. The borrowers were unable to continue injecting their personal assets into the business at the current level while waiting for the launch.
The lender turned to VITAL for assistance refinancing the conventional loan with an SBA 7(a) loan. The lender believed the borrowers were facing a temporary hardship, and would ultimately be successful with their delayed book launch if their debt repayment was more manageable in the meantime. Both businessmen had strong track records of success in their business fields and enough personal assets to strengthen their application for an SBA 7(a) loan.
The terms of the SBA 7(a) loan lowered their debt repayment to a more feasible level, by almost $5,000 per month. This freed up more of their capital to cover the delayed launch and create a new launch plan. The SBA also provided three months of payment relief as part of its COVID relief enhancements to the 7(a) program.
The lender retained the personal real estate as collateral for the 7(a) loan and strengthened its position with the SBA guarantee, which was raised to 90% during the pandemic. The lender was also able to sell the guaranteed portion of the loan on the secondary market to generate a premium of $106,000.
Learn more about VITAL’s comprehensive SBA loan services.