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Central Bank will use government programs if the borrower can not qualify for a conventional loan. The advantages of an SBA guaranteed loan is longer maturity, which results in a lower monthly payment, and also the government guaranty provides additional collateral to the bank.
Small Business Administration Loans
The SBA began in 1953 is designed to promote small business development. Central Bank has had a lending authorization with SBA since 1978. We have earned our Preferred Lender Status (PLP) so certain SBA loans are approved in-house. The process is efficient and very timely. Since the programs are funded with federal tax dollars the rules and regulations change regularly. Business size eligibility is determined by number of employees or average annual revenue. Each business industry has its own standard, contact Leslie Tanner (573) 634-1142 to determine if you are considered a small business. Here is a brief summary of the most often used programs.
The guaranteed SBA loan program is 7(a). The SBA will guarantee up to 85% of the loan if default occurs. Use of proceeds can be for expansion/renovation; new construction; purchase land or buildings; purchase equipment, fixtures, and leasehold improvements; working capital; refinance debt in limited cases; and finance inventory. Interest rates are the same as conventional loans, this is a guaranty program not an interest rate program. Maturity can be up to 10 years for working capital and equipment and up to 25 years on construction and real estate.
If you need a guaranteed loan of $150,000 or below there is a special guarantee program called LowDoc. It has less documentation. The application is only a front and back of a page which is faxed to SBA for approval. The approval time is less than 48 hours. This program is ideal for the “true small business owner”. Use of proceeds, interest rates and maturity are the same as 7(a) loans.
The SBA 504 loan program is completed with your bank and a Certified Development Company. This program is for long-term fixed assets loans including equipment and real estate. It is structured with 50% financing from your bank’s conventional loan terms; 40% financing from SBA with a 20-year fixed interest rate and the remaining 10%-15% must be equity from the borrower.
These are the three main SBA programs utilized by Central Bank. If you would like to discuss the details further please contact Leslie Tanner at (573) 634-1142 or go to the SBA website: http://www.sba.gov/.
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