How an SBA Loan could be the key to establishing your small business
For entrepreneurs, raising capital is often the biggest hurdle in turning the dream of owning a business into a reality. First-time business owners with little collateral can have an especially hard time raising funds, even when they seem to have a perfect concept. One potential vehicle, says Vice President of Commercial and Real Estate Lending Aimee Cook, is an SBA loan, a government-secured loan made through a bank to a small business owner. It’s a longstanding program of the U.S. Small Business Administration.
“An SBA loan can be the right option for certain small businesses and borrowers,” says Aimee. “It’s definitely an option worth exploring for entrepreneurs who are working to raise capital.”
When an SBA loan seems like the right fit for a borrower, Bank of St. Francisville guides customers through the loan application process, from start to finish.
“There’s a lot to it, so we take time with our customers to make sure all their questions are answered and that the application is completed correctly,” Aimee says. “There are several phases of the process, and we are right there with our customers every step of the way.”
The SBA loan application process includes several rounds of paperwork and underwriting before the final approval is made. Across the country, SBA loans range from small to large amounts of capital. They can be used for a variety of purposes, including long-term fixed assets, like remodeling or construction, or operating capital. SBA loans are not made directly to consumers. Rather, they’re issued to a lending agency or bank, which then makes the loan. SBA loans are secured for the life of loan, reducing risk to a bank and making it easier for borrowers to access capital. Some SBA loans come with continued support and technical assistance to help borrowers along the way as they launch and operate their businesses.
To qualify to receive an SBA loan, a business must meet a set of eligibility requirements. The business must be located and operate in the U.S., and it must be a for-profit business. The business cannot be able to obtain funds from another lender, and must have exhausted all financing options. The business owner must have invested his or her own time or money into the business. Usually, the business must also meet certain size standards and show it will be able to repay the loan. However, full eligibility requirements vary depending upon the lender.
SBA loans can range from as little as $500 to as much as $5.5 million. The average SBA loan amount for its 7(a) flagship program in 2018 was $425,500.
Recently, BSF customers Megan and Lyn Kenley used an SBA loan in conjunction with a Home Equity Line of Credit to open a new Anytime Fitness franchise in St. Francisville, the community’s first gym. Click here to read their story.
“We tried to go to a couple of different larger banks, but found that Bank of St. Francisville took time to do things the larger banks wouldn’t,” Megan says. “Aimee was super comforting. She walked us through each step of the process, which included using an SBA loan and a home equity line of credit.”
“We have several other projects forthcoming in which an SBA loan was the right lending vehicle,” says Aimee. “For many small business owners, this type of loan is worth exploring.”
To learn how Bank of St. Francisville can help support your small business, click here or call 225-635-6397 to make an appointment.
GIVEAWAY: Click here to enter to win a FREE 30-day Training Experience at Anytime Fitness in St. Francisville. The package includes 10 team workouts or group sessions, a full body scan, and two before and after fitness evaluations with the gym’s personal trainer.