Learn best practices for starting and running a float center:
  • This field is for validation purposes and should be left unchanged.

Something in the world of floating have you stumped?

  • This field is for validation purposes and should be left unchanged.

Show Highlights

For lots of float center owners, this is their first venture into starting a small business and it can be more than a little daunting. Fortunately, Graham and Ashkahn are available to break down specifically what the Small Business Administration does and how it operates to help those just getting their toes in the salty industry waters.

Show Resources

Listen to Just the Audio

Transcription of this episode… (in case you prefer reading)

Graham: Alright. So, today’s question is, “What is an SBA loan? Why do I keep hearing it recommended for a float center, and how is it different than a standard business loan?

Ashkahn: Okay. I guess we just start by saying what the SBA is.

Graham: Yeah, so the SBA is the Small Business Administration and they pretty much exist to help out small businesses as a government organization.

Ashkahn: And before we get into loans, they do other stuff, too, right? Like you can go to the SBA for information, and consulting, and stuff like that, right?

Graham: Yeah absolutely, they provide a whole host of resources. And, their loans, too, are geared for small businesses, since they are the Small Business Administration, but even within that, there’s a huge variety of loans that they offer — micro loans, loans for equipment, loans for real estate, general small business loans — so there’s a whole variety, both in services, and just within loans, of loan services.

Ashkahn: That they loan, themselves?

Graham: Wait, can you phrase that differently?

Ashkahn: That the SBA actually loans? I mean, we’re talking about SBA-backed-loans, from a bank?

Graham: Yep, and so that’s what these are, too. I think some of their micro loans, they might actually fund themselves.

Ashkahn: They might fund themselves.

Graham: Yeah, yeah.

Ashkahn: Okay, but the rest of it is what we’re going to be talking about, an SBA-backed loan?

Graham: Yeah. And so, and I should also say that we’re not bankers, so we’ve stumbled through this process, and we know a fair amount from both talking to people who have gone the route of getting SBA loans, and talking to advisers in the SBA, and stuff like that. Float On hasn’t actually received any loans, or financing, ever, so, whenever we talk about financing it’s a little bit outside of our exact personal experience, so just take that with a grain of Epsom salt, I guess, as we’re going through this.

So, the SBA-backed loans is basically a lending institution, often a bank or something like that, will be actually giving out the value of the loan, and what the SBA is doing, is guaranteeing the amount of that loan to the bank. So it’s kind of like an intermediary default level, right? Like if you get a loan, and things fall apart, and you don’t end up paying back the loan, rather than the bank or whoever’s doing the lending, not getting that money back, really, who’s not getting that money is the SBA. They’re kind of coming in, and being like, “Okay, we guaranteed this loan up to a certain amount, so we’ll pay the bank the money that you were unable to pay them,” and that makes lending institutions way, way more likely to lend to small businesses.

Ashkahn: Right, it just takes out the kind of riskiness that comes with funding something that doesn’t exist yet, and I think that’s the basic reason why a lot of people go with SBA loans — it’s just really difficult to get a non-SBA backed loan from a bank if you’re starting a small business.

Graham: Almost impossible, these days.

Ashkahn: Yeah, it really seems like banks, by default, they’re looking for like three years of finances, and tax returns, and stuff like that, and you’re like, “Oh no! This doesn’t exist yet. I don’t have three years of financials to show you.”

Graham: Yeah, and if you go the route of trying to talk to a lender, trying to get a non-SBA-backed loan, you’ll just hear some preposterous terms back, almost certainly. Things like, you need 80% down on the loan, or that the interest payment is ridiculous, or they want the entire thing paid back within two years, or something really high, because you’re in this really high-risk category.

Ashkahn: Right.

Graham: And, because you’re high-risk and you don’t have anyone backing you, they’re like, “Okay, well yeah sure, if you have 80% of the loan payment, itself, then, yeah, we’ll give you the other 20%,” or something, again, a little more extreme like that.

Ashkahn: That’s why you hear about this from float centers or other businesses starting up — it’s just by far the most common way someone’s actually managing to secure a loan. It’s very difficult to do without SBA backing.

Graham: Exactly, and if you are thinking about going the SBA route, a few things to know —  the SBA has a bunch of institutions that are able to apply for SBA loans. Almost any lending institution that you go to. You can also try to go through the SBA to get that loan. But there are some pre-approved lenders, as well, who, if they decide to get out a loan, they don’t even need to go back to the SBA to get approval from them on the granting loan. So, they’re pre-approved, in the sense that, if they grant you a loan, that loan can automatically be an SBA-backed loan. And you’ll see this for a lot of banks, like Bank of America, Wells Fargo, Chase, things like that, have historically been SBA pre-approved lenders, which makes sense. They have an extreme loan process themselves and the SBA looks at them, and they’re like, “Okay, well, that’s about what we do to vet,  so, like, you’re good.”

So, you can get that list of pre-approved lenders from the SBA, and they’re a great resource to go to to find out more information about how to increase your chances of actually succeeding in getting an SBA-backed loan, and who to approach, and things like that. They’ll also help you through the process. If you contact your SBA, in addition to actually backing these loans, you can talk to advisers who will take a look at your business plan, let you know if they think you should change anything, if they think anything’s missing and the loan process is going to be harder, things like that. Definitely take advantage of more than just their money. They make the entire road a little easier, too.

The last thing I wanted to say, was the type of loan, too, can have an impact. One nice thing about getting a loan with a float tank center, is we do have these big expensive pieces of equipment that tend to maintain their value over time. Having an equipment-based loan, especially if you’re going in with a certain amount of the money, and all you need is an amount of cash equal to or less than the amount that your float tanks are costing, getting an SBA-backed equipment loan, specifically, is really nice. It’s just another one of those things that lenders like having to fall back on.

If you’re unable to pay the loan, then, they can always seize your equipment, and sell it off, and the fact that float tanks keep a lot of their value on the used float tank market is also a really good argument, in that case, for getting an equipment loan. So, again, if you’re already going in with a healthy amount of the money for your own buildout and stuff like that, that’s a really good option to look at, as well.

Alright, thanks for tuning in everyone, and, as always, toss your own questions up at floattanksolutions.com/podcast, and we will answer them later.

Recent Podcast Episodes

Is it Bad for Float Centers to Always be Running Discounts? – DSP 195

Welcome to the last episode in Social Media Week with Derek, Ashkahn, and Graham. If you haven’t listened to the other episodes in the series, it is strongly recommended that you start at the beginning especially for this episode as it references some points brought up earlier in the week.

Derek and Graham share some more intricacies of the Float On business philosophy and share their opinions on constantly running ads for floats through Groupon or on Social Media. Admittedly, Float On doesn’t run discounts very often, and they share why that is. They also talk about how to run discounts effectively and have a tough conversation about what to do if you want to break that cycle of constant discounts for your floats. 

What’s a Reasonable Amount to Spend on Facebook Ads? – DSP 194

Welcome back to Social Media Week!

After talking so much about the fundamentals of social media and its impact on float center marketing, we’re finally able to answer some of the more complex questions that float centers ask. If you haven’t listened to the rest of the Social Media posts from this week, it is strongly recommended you check those out first.

In this episode, Derek provides practical advice for how much to spend on ads for your center, and while each location is going to be different, there are some tried and true tips to follow to help each center find their ideal advertising system.

Choosing Facebook Ad Options for Float Centers – DSP 193

Today on Social Media week, Derek educates Ashkahn and Graham on what exactly it’s like placing an ad on Facebook. 

Facebook, as well as other social media sites, provide a cornucopia of options for targeting your ad based on employment, interests, age range, and lots of others. For float centers, this can become fairly confusing, especially since floating doesn’t have demographics in the traditional sense.

Derek clears things up and explains to Graham, Ashkahn, and the rest of the float community, exactly why these options exist and what might work for a specific center.

What the Hell is Facebook Pixel? – DSP 192

Welcome back to Social Media Week!

A Pixel is a tool used when creating an ad account that allows you to create target audiences for your ads. How you use it and what to use it on are more complicated answers though.

Fortunately, Graham and Ashkahn have Derek to use as a resource and they have him break down how best to utilize target audiences and how to get the best bang for your buck.

Can you Cross Post to Different Social Media Platforms? – DSP 191

Today on Social Media Week, Ashkahn and Graham pick Derek’s brain about how to get content for several different social media platforms.

Derek shares his tips for how best to broaden your reach with your social media and not fatigue your audience with the same content on multiple platforms. He also shares what type of content works well on different platforms. 

Latest Blog Posts

Finding Funding for Your Float Tank Center

Finding Funding for Your Float Tank Center

Starting a float center isn’t an inexpensive business opportunity. Depending on the type of float tanks you choose, size of your retail space among other factors, a center can cost between $65-100k per room to fully set up. While centers have started for less money up front, the cost of frequent repairs from salt damage and cutting corners during construction will cost more money in the long run.

Water Hardness in a Float Tank

Water Hardness in a Float Tank

What is water hardness?  Water hardness is, at its most basic, the presence of certain minerals in water. Historically, water hardness was a measure of water’s ability to form lather during laundering. Harder water, due to it’s high calcium/magnesium content, would...

A Blogging Experiment Brought to You By…

A Blogging Experiment Brought to You By…

At Float Tank Solutions, we're always playing around with different ways to provide benefits to everyone. We've gone a long time actively turning down sponsorship money, to ensure that we stay a source of (as much as is humanly possible) impartial information for...

How To Keep Empty Tanks Warm

How To Keep Empty Tanks Warm

The goal of any float center is to never have an empty tank. However, reality says that there will be slow times of the year, last minute cancelations, and unexplained openings in the schedule that will require you to maintain the temperature of an empty tank until...