You may be asked for a Certificate of Existence by a lender or if you do business in another state. What exactly is a Certificate of Existence? A Certificate of Existence is simply a document that indicates that your business is properly registered with the state and have followed all state requirements. It serves as evidence that the entity exists and is authorized to transact business in the state.

Why would a business need to provide a Certificate of Existence?

Carl Dietz, Business Services Attorney, with the Iowa Secretary of State’s office explains, “The primary reason an entity may want to have a Certificate of Existence issued is to include it with an application for authority to operate in another state.  For example, if a corporation incorporated under the laws of Iowa that operates a restaurant chain wants to open its first restaurant location in Nebraska, it will need to apply for authority from the state of Nebraska to do business in that state.  Part of Nebraska’s application requirements will almost certainly be a Certificate of Existence issued by the Secretary of State of Iowa.”

You may also be asked to provide it by a bank when applying for a loan or line of credit in the name of the business.

Which businesses can obtain a Certificate of Existence from the Secretary of State?

Requirements in order to be in “good standing” vary by state but typically they include:

–            Registering with a state agency to conduct business

–            Being up-to-date on all your taxes and fees

–            Filing annual or biennial reports

All states require registration of corporations and limited liability companies (LLCs).

How do I obtain a Certificate of Existence?

You can apply for the certificate by simply contacting the Iowa Secretary of State’s Business Services Division in person, by mail, or online through their website, www.sos.iowa.gov. The cost is five dollars. Be careful not to fall for scams and pay more than needed for this certificate. If you are in doubt, contact the Secretary of State’s Business Services Division for clarification.

Have further questions about this or other business concerns? Schedule an appointment for confidential, no-cost business advising at one of our 15 regional centers across the state of Iowa. You can request an appointment online at iowasbdc.org.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops.

For more information on America’s SBDC Iowa programs or services, visit www.iowasbdc.org, https://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.

Is an SBA 7(a) Loan the Right Business Financing Option for Right Now?

With the National Federation of Independent Businesses (NFIB) reporting that 92% of small businesses have been negatively impacted by coronavirus pandemic, the Small Business Administration has become an even more critical financial resource.

The SBA’s business relief Payroll Protection Program has captured a great deal of attention recently, but its narrow focus on maintaining payrolls during the pandemic means the funds can only be used for very specific purposes: payroll, rent, mortgage interest, and utilities. For businesses that need longer-term financing for more flexible purposes, the SBA’s flagship 7(a) program offers many benefits.

Though it’s been around for decades, many business owners aren’t familiar with the SBA 7(a) program – which gets its name from section 7(a) of the Small Business Act of 1953 – and may have never considered a 7(a) loan.

Particularly when the economy is uncertain and business cycles are unpredictable, an SBA 7(a) loan can be critically valuable. There are many reasons a business may be a good candidate, including factors such as:

• Being a start-up business without an established history
• Experiencing a temporary slowdown in revenue
• Having seasonal income
• Not having enough collateral to secure your desired loan amount

Does anything on that list apply to you?

An SBA loan may not have been on your radar screen before, but today’s business climate is like nothing we’ve seen in the past. Now may the right time to give the 7(a) program a fresh (or first) look. Here’s an overview of the key features.

• Access up to $5 million in capital. If needed, a business can access high amounts of capital with an SBA 7(a) loan. This can be particularly helpful for companies that need to invest in expensive equipment, materials, or technology. Business that don’t have as sizable financial needs will be happy to learn that for loans under $350,000, there is a more streamlined process and faster turnaround time.
• Obtain a loan with little or no physical collateral. Most conventional commercial loans are fully secured with physical collateral, which mitigates risk for the lender. An SBA loan offsets the lender’s risk when collateral is missing because it is backed by the U.S. government.
• Longer terms for lower monthly payments. A key benefit of 7(a) loans is the option to extend the terms beyond what conventional business loans offer. This can mean up to 10 years for equipment loans, and 25 years for real estate loans. Business that take advantage of the maximum terms can lower monthly payments and significantly improve cash flow – a particularly attractive benefit while the economy is uncertain.
• Competitive interest rates. The growth of financial technology in recent years has created a new arena of non bank lenders that companies can turn to for fast capital – but, this often comes at a cost. An SBA 7(a) loan almost always offers better interest rates for long-term financing, saving companies thousands of dollars over the long run.
• Six months of payment relief. For new 7(a) loans authorized prior to Sept. 27, 2020, the SBA is offering six months of payment relief as part of its coronavirus business aid. This means the SBA will make six months of payments, interest, and associated fees, beginning with your first loan payment. This is not a payment deferral, and you won’t be required to apply for loan forgiveness. You are automatically eligible when your loan is approved by the SBA.

SBA 7(a) loans are here to help small businesses succeed whether the economy is up, down, or somewhere in-between. In any business climate, an experienced SBA lender can be an important partner in supporting the long-term health of your business.

Ryan Collins is a commercial lender with Lincoln Savings Bank, a community bank proudly serving Iowans since 1902. For more information about an SBA loan through LSB or other commercial lending services, please contact  bln@mylsb.com or visit www.mylsb.com.

Ryan Collins’ passion for assisting small business owners began with his time at Lincoln Savings Bank, but his passion for teaming up with individuals can be traced back to pre-professional days as a football player and strength coach at Central College. It is at that time when he started to truly learn the importance of a strong team. That passion/understanding has carried over to his professional career as he implements that teamwork with small business owners. He and Lincoln Savings bank aim to fulfill dreams by providing access to the necessary capital.

The information in this blog post is intended for general educational purposes only. This is not an official endorsement of any bank service or product.