What is the SBA? The Small Business Administration is a government agency formed in 1953 to provide guaranties for loans originated by commercial banks. It originated after World War II to help businesses get started.
Why are SBA loans so important? Based on sba.gov FAQs (Mar 2014), approximately 99% of all employer firms are small businesses. They employ almost half of all the private sector employees and pay 42% of the total US private payroll. Small businesses have generated 63% of net new jobs annually between 1993 and 2013. According to the SBA Administrator’s blog (Jan. 2015), small businesses generated nearly 2 million of the private sector jobs generated in 2014.
What businesses qualify for SBA? Most “main street” small businesses are SBA eligible. They must be for-profit and be engaged in providing a service or product to the general public and have fewer than 500 employees.
Why consider a SBA loan? Terms are longer through SBA programs than conventional bank loans (up to 25 years for real estate) and have no balloon payments. Having a longer term, fully-amortizing loan helps cash flow. There are no prepayment penalties for loans with a term shorter than 15 years. Down payments are typically lower and SBA permits more flexible collateral requirements, whereas a lack of equity or collateral shortfall may be an obstacle to conventional financing.
The Myths of SBA – Only bad credit risks use SBA, too much paperwork, too expensive and takes months to get approved. This is not the case, particularly at Stearns Bank. Working with the right lender can make all the difference. Stearns Bank is a SBA Preferred Nationwide Lender. Through the Preferred Lender Program (PLP), Stearns Bank has delegated underwriting authority and approves SBA loans in-house. Stearns Bank also offers a FASTTrack SBA program, providing same-day approval on SBA loans under $350,000.
Please consider a SBA loan for your next financing need and contact me at Stearns to make the process a smooth and enjoyable one.