“The Alliance
was instrumental,
not only with funding, but
with development of a viable
business plan and the logistics
of opening up a business.

— Stomping Ground

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Frequently Asked Questions

 

Why do I need a business plan to apply for a loan?

A business plan is required for two major reasons: as an internal tool of measuring how your business is performing and an external tool for obtaining funding. A business plan is a road map for your business; it defines your goals, budgets, pinpoints strengths and weaknesses, and helps determine if your business is viable. A business plan is an ever-evolving document; it should be reviewed from time to time to make sure you are still on track with achieving your goals. As time goes on you may find that you need to revise your plan to meet the current business environment. A business plan should help you manage and operate your business towards success. Finally, a business plan provides a comprehensive plan of your business idea and financing requirements for lenders and investors to evaluate.

Where can I get help to complete a business plan?

There are many FREE resources available to help you complete a business plan. It all depends on your preferred way of learning, one-on-one or online.

If you prefer one-on-one counseling/mentoring here are two organizations that can help:

  • CT SBDC (Connecticut Small Business Development Center) at 855-428-7232 or visit their website ctsbdc.com to learn more and make an appointment with a local business advisor.
  • SCORE, visit their website score.org to learn more and find a chapter/mentor in your area.

If you prefer online tools and/or workshops here are a couple of sites to visit:

  • SBA (Small Business Administration) sba.gov . They have information and an online tool that provides a step-by-step guide on completing a business plan. Click on the Build Your Business Plan to access the online tool.
  • SCORE also has online workshops and templates on completing business plans. Click on Business Plans for Startups to access the online tools.

Also please be sure to visit our Resource tab for more resource information.

What types of financial statements are required?

The Northeast Alliance requires the following financial documents be included with the application:

  • Personal financial statement for each principal
  • Personal tax returns – 3 years for each principal
  • Business financial statements – 2 years if available plus year-to-date. The following financial statements are required:
    • A complete listing of all business assets
    • Balance sheet
    • Profit and Loss/income statement first year by month, second and third years by quarter
    • Current account receivables
    • Current accounts payable
    • Cash flow first year by month, second and third years by quarter
  • Business tax returns – 3 years if available
Do you check credit scores?

Yes, it is just one of the factors used in the loan approval process.

What criterion is used to determine loan eligibility?

We use the following criteria:

  • Proposed/existing business must reside in our service area
  • Duly filed with the State of Connecticut as a business entity
  • Provide a current viable business plan
  • May or may not have been able to obtain conventional financing
  • Provide evidence that job creation/retention will be a result of the loan
  • Establish an economic benefit to the community/region
What is your lending/service area?

The Northeast Alliance currently lends to businesses in 21 towns in the northeast corner of Connecticut. The following towns are within our lending/service area:

Ashford

Brooklyn

Canterbury

Chaplin

Columbia

Coventry

Eastford

Hampton

Killingly

Lebanon

Mansfield

Plainfield

Pomfret

Putnam

Scotland

Sterling

Thompson

Union

Willington

Windham

Woodstock

Do I have to be a start-up business to qualify for a loan?

No, we provide business loans to small- to medium-sized businesses that are either in the start-up or expansion phase.

What are you loan limits?

Our loans generally range in size from $5,000 to $50,000. However, we do have the capacity to structure larger loan amounts, up to $150,000.

For what can I use the funds?

Funding can be used for the following purposes:

  • Business acquisitions or purchases
  • Commercial real estate
  • Purchase machinery or equipment
  • Start-up costs
  • Working capital
  • Capital improvements, including leasehold
  • Business development or expansion
  • Debt refinancing with receipt(s) and plan
What are your terms and conditions?

Depending on the use of the funds the following terms will be considered:

  • Start-up expenses – 3 to 5 years
  • Equipment – 3 to 5 years
  • Working capital – 3 to 5 years
  • Leasehold/capital improvements – 3 to 7 years
  • Real estate – 5 to 20 years

Please note: all terms are subject to approval by the Board of Directors.

Is collateral needed to secure a loan?

Yes, we require some form of collateral to secure the loan. The following are the types/form of collateral that may be required:

  • First security interest in all business assets filed with the Secretary of State (Security Agreement & UUC-1 filings). Second interests may be considered.
  • First or second priority lien on real estate, either commercial or residential, including Assignments of Rents and or Leases.
  • First or subordinate lien on licensed titled vehicles.
  • Personal guarantee of all borrowers with equity position.
  • Personal guarantee of the business entity, as determined by counsel.
Is there an application fee?

Yes, there is a $250 non-refundable fee due upon submitting the loan application to the Northeast Alliance.

Other than the application fee what other costs are associated with getting a loan from the Northeast Alliance?

In addition to the $250 non-refundable application fee the other costs include:

  • An origination fee which can range from 0 to 6 percent of the loan amount depending on the application. The origination fee covers any underwriting and administrative expenses incurred by the Alliance.
  • Closing costs which are paid by the applicant.
How long does it take to get a loan application approved?

The loan approval process can take 6 to 8 weeks from the time the loan application is presented at the Business Finance Committee and the Board of Directors monthly meetings. Once all questions from both committees have been satisfactorily answered and the loan approved the applicant will receive a commitment letter from the Northeast Alliance with the terms, conditions, collateral requirements along with a closing date.

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