It’s no secret that credit markets have been tight in the past couple of years, which has created challenges for people wanting to start new businesses, expand their current operations or refinance debt. But, there is good news on the credit front, particularly for eligible small and medium-sized businesses. A variety of loan products through the United States. Small Business Administration (SBA) are providing the needed capital for growth opportunities for many businesses in our region.

SBA loans offer a number of potential advantages, including lower down payment requirements and the ability to spread financing over a longer period of time. SBA interest rates are market driven, but in some cases a maximum rate is determined by the SBA.

You’ll first want to determine if you qualify for a SBA loan program.  The best way to determine that is to consult with an established SBA lender. You may also want to visit the SBA website at www.sba.gov.

SBA financing may be right for you if any of the following apply::

•   You are starting or buying a new business.

•   You  have been in business only a short time.

•   You are short on collateral.

•   You need additional working capital to finance rapid growth.

•   You only have 10 to 15 percent available to put down on the purchase of a business.

•   You are unable to obtain financing with reasonable terms through conventional methods.

The next step is to determine the right SBA loan product for your organization. Again, your lender can help you make that determination, but there are a number of exciting products available, including the following:

The SBA 7(a) Loan Program is one of SBA’s primary lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. Eligible for-profit businesses must have reasonable owner equity to invest, be engaged in business in the United States, and each owner with a 20 percent or greater stake in the business must be willing to make a personal guarantee.

The SBA 504 Loan Program provides growing businesses with long-term financing for purchases of fixed assets, such as buildings and heavy equipment. Eligible businesses include small and medium-sized companies where the financing will help them create and retain jobs for the local community. Eligible for-profit business entities must have net worth of less than $8.5 million, net income of $3 million or less, commercial property must be owner occupied, and each owner with a 20 percent or more stake in the company must make a personal guarantee.

The SBA Express Program is a streamlined program designed to provide access to financing for small business. The program has reduced documentation requirements and offers a quick approval process. Eligible for-profit businesses must generally have $6.5 million or less in annual average revenue, be engaged in business in the United States, and each owner with a 20 percent or more stake in the business must make a personal guarantee.

The Patriot Express Pilot Loan Program is a streamlined loan product for the military and features enhanced guarantee and interest rate characteristics. Patriot Express is available to military community members, including veterans, service-disabled veterans, active-duty service members participating in the military’s Transition Assistance Program, Reservists and National Guard members, current spouses of any of the above, and the widowed spouse of a service member or veteran who died during service, or of a service-connected disability. The Patriot Express loans are available up to $500,000 and qualify for SBA’s maximum guarantee of up to 85 percent for loans of $150,000 or less and up to 75 percent for loans $150,000 to $500,000.

The final piece of advice to consider when investigating a loan from SBA is to work with a lender that has received the SBA’s Preferred Lender Program (PLP) designation. The PLP status allows the lender to obtain quicker approval on SBA-guaranteed loans for its business clients. The SBA approval process on guaranteed loans through a PLP lender is two to three business days, compared with 10 to 15 business days for lenders that have not earned the trusted PLP designation.

SBA loans have proved to be an extremely valuable resource that can open the door to growth opportunities and provide jobs and investments needed in our community.

		David Feldpausch is vice president, small business lending for Capitol National Bank.