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Small Business Loans

For small business loans and banking services, Stearns Bank has unmatched strength, stability and experience. Our team is ready to offer options and lend a helping hand.

The Stearns Bank lending team has expertise in various SBA programs and can guide you through the process, from eligibility to approval and funding. As a Small Business Administration Preferred Lender, we're proud to help move small business forward every day. When a new opportunity finds you, contact us.

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Small business loans, SBA lending from Stearns Bank

SBA Loan Programs

Stearns Bank can help you obtain the right financing for your business needs. As a Preferred SBA Lender, we have experience with various SBA programs.

SBA 7(a) loans are the most commonly used loan option for business financing. These loans can be used for a wide range of purposes, including business acquisitions, start-ups, working capital, business expansions, debt refinance, equipment and supplies.

Loan terms are dependent upon purpose; for example, while many 7(a) loans are 10 years, the maximum term for real estate loans is 25 years.

Loan Requirements

General SBA 7(a) loan requirements state that your business must:

  • Be a for-profit business operating in the U.S.
  • Be a small business, as defined by the SBA
  • Have, as a business owner, invested your own time and money into your business

Interest Rates

Rates are based on the Wall Street Journal prime rate plus a lender spread, which is subject to SBA maximums, based on the term length, or maturity, and the loan size.

Loan Type Options

While SBA 7(a) is used as a general term, there are many loan types within the program. The best type of loan for your business will depend on how you will use it and when you will need it.

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Business owners seeking to buy commercial real estate, equipment, machinery or other major fixed assets can consider SBA 504 loans as an option.

Business owners looking for debt refinance may benefit from the SBA 504 Debt Refinancing Program.

SBA 504 loans differ from other loan programs because of their three-part structure, which includes the lender, a Certified Development Company (CDC) and a borrower.

Varying circumstances affect the model breakdown and down payment responsibility of the borrower within that structure:

Business Type Payment Responsibility
Typical business in operation for more than two years Lender 50%, CDC 40%, Borrower 10%
Start-up or new business in operation for less than two years
OR
Special-purpose property in business for more than two years
Lender 50%, CDC 35%, Borrower 15%
New business AND special purpose property Lender 50%, CDC 30%, Borrower 20%

Special Purpose Properties

A special purpose property is one that is not easily converted for other uses and where the operation of the business is tied directly to the real property value and physical location. Examples include car washes, museums, sports arenas, gas stations, hospitals and theatres.

Although the borrower’s contribution is higher in a special purpose property, SBA financing is often a better option than conventional terms, which often require upwards of 30% down from borrowers.

Loan Requirements

To be eligible for a 504 Loan, your business must:

  • Operate as a for-profit company in the United States or its possessions
  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

There are other general eligibility standards for an SBA 504 loan including SBA size guidelines, qualified management expertise, and a feasible business plan. Loans cannot be made to businesses engaged in nonprofit, passive, or speculative activities.

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The saying, “You have to spend money to make money,” resonates in every sector of business. But in order to spend, you also must HAVE the money. That money, known as working capital, is the operating liquidity available to a business and is calculated by subtracting current liabilities from current assets.

Everyday Expenses

When funds are not readily available to operate or expand, working capital loans can help cover everyday business expenses. These fully amortizing loans are primarily short-term – up to 7 years with no prepayment penalties.

Among the many uses, working capital loans can help:

  • Purchase inventory
  • Hire staff
  • Advertise
  • Update software
  • Pay debt
  • Pay expenses
  • Purchase equipment
  • And more

Loan Requirements

Working capital loan requirements state that your business must:

  • Be a for-profit business operating in the U.S.
  • Be a small business, as defined by the SBA
  • Have, as a business owner, invested your own time and money into your business

From weathering a slow season to exploring a new expansion opportunity, or simply to catch up on expenses, a working capital loan could be the link needed to cross into the next phase of business.

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Used to help businesses enter and expand into international markets, the SBA’s International Trade Loan (ITL) offers a combination of fixed asset, working capital financing and debt refinancing.

Exporter Eligibility

To be eligible, your business must:

  • Be a for-profit business operating in the U.S.
  • Be a small business, as defined by the SBA
  • Have, as a business owner, invested your own time and money into your business
  • Establish that the loan will allow the business to expand or develop an export market, or enable the business to improve its competitive position

Foreign Buyer Eligibility

To be eligible to purchase goods or services from your business, foreign buyers must be in countries wherein the Export-Import Bank of the U.S. is not prohibited from providing financial assistance.

Use of Proceeds

For the facilities and equipment portion of the loan, proceeds may be used to acquire, construct, renovate, improve or expand these assets in the U.S. to produce goods or services involved in international trade.

  • Working capital is an allowable use of proceeds under the ITL.
  • Proceeds may be used for the refinancing of debt structured with unreasonable terms and conditions, including any debt that qualifies for refinancing under the standard SBA 7(a) Loan Program.

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SBA 504 Debt Refinancing Program

Reduce debt payments, release equity

Small business owners can reduce their monthly debt payments by refinancing under the SBA 504 Debt Refinancing Program. This program allows small business owners to access equity by refinancing eligible business expenses. Repayment terms up to 25 years.

Loans are subject to all applicable loan requirements of the SBA 504 Loan Program. General qualification criteria:

  • At least 85% of the loan being refinanced was used to buy, build or improve fixed assets
  • Must have been in business for at least two years prior to the refinance application request
  • The property must be owner occupied
  • Collateral securing the loan is supported by an independent appraisal prior to closing

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SBA 504 Debt Refinancing Program
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The Power Of The Portal

With the Customer Portal, you always know the status of your loan request. The portal enables you to upload all documents and statements required for your application. You can easily review the list of documents received and any still pending. If you have questions, you can contact the Stearns Bank lending team with our convenient chat feature. Other portal benefits:

  • Loan overview – Visibility to approved terms and conditions
  • Documents – Seamless and secure submission of documents
  • Equity – Monitor money injected into your project through the equity tracking feature
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The Stearns Bank Difference

  • Check markLoans approved with speed and precision
  • Check markLoans up to $5 million approved in days
  • Check markIn-house approvals
  • Check markPreferred lender status
  • Check markCollateral options
  • Check markFlexibility to re-approve changing budgets
Revived Iron Auto Repair

Revived Iron Auto Repair

Dallas Nestvold
Stacy, Minnesota

Small-town life suited Dallas Nestvold when he decided to start Revived Iron Auto Repair in Stacy, Minnesota. A small-town approach to business loans from Stearns Bank also met his needs when he was looking for an SBA loan.

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Minnesota SBA Lending Team

Get in touch with Tom Ethen
Tom Ethen
VP Commercial Lending
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Get in touch with Josh Villa
Josh Villa
VP/Sales Manager
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Get in touch with Bill Schmidt
Bill Schmidt
Account Manager
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Get in touch with Douglas D'Aigle
Douglas D'Aigle
Market President/Commercial Lender
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Get in touch with Al Schulz
Al Schulz
VP/Commercial Lender
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Get in touch with Joshua Borgerding
Joshua Borgerding
SBA Commercial Lender
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Arizona SBA Lending Team

Get in touch with Daniel Sedillo
Daniel Sedillo
VP/Commercial Loan Officer
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Get in touch with Katie Peterson
Katie Peterson
Commercial Lender
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Small Business Lending FAQ

Why should I choose an SBA loan?
SBA loans often require less borrower equity. SBA loans can greatly benefit small businesses that need capital for a start-up, expansion, inventory, buildings, equipment, exporting and other needs. Terms are typically 7 to 10 years and may be up to 25 years in situations involving real estate.
How much time is involved in the financing process?
Stearns Bank understands you’re busy and we’re committed to make your financing a simple process. Loans are approved with speed and precision. Loans greater than $350,000 often are approved in a few days. With Stearns Bank, the application process is fast and simple. Just provide us with basic information about you, your business and your financing needs. We’re ready to fund when you’re ready to close.
How quickly will I receive my money?
You’re in control of the timeline. We have innovative tools available to speed up the process, including document review and sign-off using any device from anywhere you choose. The Stearns Bank Customer Portal provides drag-and-drop secure document submission along with full visibility, any time, to your SBA loan closing. With Stearns Bank, you control the pace to closing and you determine how quickly you want to receive the money.
How can I use the funds from my loan?
You name it. All types of business-related costs can be included in your SBA financing request. These costs include: start-up, acquisition, remodel, expansion, succession, real estate purchase, construction, equipment, leasehold improvements, inventory, working capital, franchise fees and debt refinance. Stearns Bank has decades of experience as a Preferred SBA Lender, so just call us and ask.
What down payment amount is required for an SBA loan?
The SBA loan program allows for a lower equity injection than many other financing options. Stearns Bank will work with you to find the right balance of capital and equity based on your business, your cash flow and growth plans.
What is the required collateral for an SBA loan?
If you’re financing the purchase of equipment or real estate with an SBA loan, that equipment or real estate will serve as collateral. Often, SBA loans can be secured without additional collateral outside of the business’s assets. Most small business loans can be extended without being fully secured by collateral. Stearns Bank, as a Preferred SBA Lender, has some discretion as to whether collateral is optional or required on some SBA loans.
Will I have a prepayment penalty?
Generally, no. Most SBA loans do not have a prepayment penalty, allowing you to manage the principal balance of your loan. SBA loans with a longer term may have a minimal prepayment penalty in the first three years. However, this only applies to loans with principal reductions of 25% or more.
What information do I need to provide to close on the loan?
Stearns Bank has developed an efficient process to speed up loan closing. We try to reduce documentation where we can to make things easier on our customers. Typically, you’ll need to provide your business information, organization documents, lease agreement (if leasing space for operations or production), insurance information and a construction quote (if building or expanding). The Stearns Bank Customer Portal provides an easy, safe and secure way to collect all documentation necessary to close the loan. This digital platform provides a detailed list of the documents needed with real-time updates on your loan progress as documents are submitted. With Stearns Bank, you’ll have the same experienced lending team that originated your loan assist throughout the closing process.
How do I apply for an SBA loan?
Quite simply, call and talk to us! Stearns Bank’s customized application and streamlined loan closing make the process easy. We understand your individual needs and we’re ready to work with you to Get the Job Done!
Are there fees associated with SBA financing?
There are typically fewer fees associated with an SBA loan compared to other conventional loans. This is due to SBA limitations on the amount and type of fees that can be charged to a borrower. With Stearns Bank, all fees are transparent and fully disclosed, so there are no surprises. And, these fees can be included in the financing package.
What if I have already spent money toward the project I’m looking to fund?
All fees must be included in the project cost. If money spent prior wasn’t included in the project cost, and now you have the expense, it’s not automatically given as equity credit. Project costs prior to receiving a loan are reviewed on a case-by-case basis.
Will I be in contact with a loan officer throughout the finance process?
Yes! Personalized service is our commitment to you. At Stearns Bank, the same loan officer and loan team will work closely with you for the life of the loan. We understand every individual has a communication preference. Therefore, you can easily connect with your loan officer and other Stearns Bank team members by phone, by email or via the chat feature within the Stearns Bank Customer Portal – our digital platform for fast, secure communications and document submission. Additionally, Stearns Bank offers a best-in-class servicing team dedicated to help you for the life of your loan.
How do I decide which bank to work with for my SBA loan?
Working with a bank that has vast knowledge and experience with SBA loans, like Stearns Bank, is highly beneficial. We believe it’s critical that you understand and are comfortable with each step in your financing, from application to closing and beyond. Not all financial institutions do SBA loans the same way. Our goal is to do things quickly and efficiently. We provide our customers real-time updates with our Customer Portal. With the portal, we try to make our customers' lives a little easier by providing a transparent checklist to show what they have to do to close their loan. Stearns Bank has been providing SBA loans for decades and takes great pride in Getting the Job Done!
Is Stearns Bank an SBA Preferred Lender?
Yes. Stearns Bank has been a Preferred SBA Lender for decades. This designation means Stearns Bank has authority to make its own decisions on SBA loans, such as approving and closing, without having to go to the SBA for approvals, closing or funding. As a Preferred SBA Lender, Stearns Bank has been audited and approved by the SBA for the SBA Loan Program, meeting all eligibility criteria. The criterion includes proficiency in processing and servicing SBA-guaranteed loans. This designation allows Stearns Bank to source, approve and fund SBA loans to customers throughout the U.S.
Can I have more than one SBA loan?
Yes. There is no limit on the number of SBA loans you can have. The SBA Loan Program allows up to $5 million in SBA loans to any one borrower. This makes it easy and convenient to work with Stearns Bank on the initial and any future SBA loans, so we can help your business grow today and well into the future.
Are there differences in getting an SBA loan from one bank or another?
Yes. The bank you choose for financing will affect the time it takes to approve and close your loan. There can be considerable differences in the execution, delivery and servicing of an SBA loan. Stearns Bank is a Preferred SBA Lender, highly experienced in all types of SBA lending. We streamline and expedite the SBA application-to-funding process. SBA loans through Stearns Bank save you time and money by making your SBA experience flexible, fast and simple.

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