What small businesses should know about SBA loans

Christopher Kneer

 

BY CHRISTOPHER KNEER, Guest Columnist

A business seeking funds to grow should look into the possibility of acquiring a Small Business Administration 7(a) loan.

Vicki Doble and her family wanted to expand the Tampa Bay Brewing Company with a second location in Westchase. USAmeriBank helped them to obtain an SBA loan and achieve that goal.

“The whole SBA process went very smoothly and the entire SBA team was extremely helpful,” Doble said. “We had anticipated the standard 20 percent overage in construction costs, but when costs were a little more than expected, we went back to USAmeriBank for more money, and they made it work for us.”

There are some misperceptions that the process to obtain an SBA loan is extremely long and complicated, but an experienced SBA lender can guide you through the necessary steps. The general timeframe for approval is usually 45-60 days.

If you’re thinking about pursuing an SBA loan for your business, here are some of the most common questions, and the subsequent answers, I am asked about SBA loans:

What is an SBA loan and why can it be a good option?

An SBA loan is a standard business loan made by a bank, but it carries the backing of the Small Business Administration, which allows the lender to make loans that might not meet conventional criteria. Because it carries this backing, an SBA loan can be a good option if you are light on collateral, have minimal liquidity or are a new business. If the loan is approved, the government will guarantee between 75 and 85 percent depending on the amount.

What types of businesses qualify for SBA loans?

Most small businesses are eligible to apply for an SBA loan, but you must be an operational, for-profit business to qualify. Borrowers can use SBA loans for any business-related purpose, like hiring new employees, purchasing inventory or equipment, acquiring a new building and consolidating debt. SBA loans do have some restrictions. They can’t be used to buy investment property, like an apartment complex.

What are some of the key factors to qualify?

Approval is largely based on a borrower’s cash flow and ability to pay back the debt. The bank and the SBA will analyze your company’s financial history and your personal financial statement. They’ll want to see your credit score and how your business is doing, and will also consider how you’ll use the loan. The amount of money you would need to put down to secure an SBA loan is determined on a case-by-case basis.

What information do I need to provide the lender to apply for an SBA loan?

To apply, business owners need to provide a current personal financial statement, three years’ worth of both business and personal tax returns, and other items depending on the deal. First-time commercial borrowers may need help putting together a business plan and getting their financials together. A bank can help and suggest nonprofits, like SCORE or a Small Business Development Center in your area.

How do I get started?

You’ll need an idea of what specifically you would use the funds for and how much you are requesting. Once you know that, you can meet with a bank. It’s important to work with a bank that does a lot of SBA lending, so you can work with a banker who knows the rules and regulations and how to get the application done quickly and efficiently.

Christopher Kneer is Senior Vice President, Business Banking Manager and SBA Program Manager for USAmeriBank. Kneer has more than 20 years of banking experience in the Tampa Bay area. He joined USAmeriBank in 2011 to grow and manage the business banking team and create the bank’s SBA program, which has ranked first among Tampa Bay’s top SBA lenders for three straight years. For more information on SBA loans, email SBAInfo@usameribank.com or call 1-866-979-2265.

 

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