TranslateThe Federal Small Business Administration (SBA) does not directly fund loans. They are a government agency guarantor for loans that are made by the lending agency. This allows small businesses in search of funding to obtain a loan that the bank would not normally entertain. The Federal government is basically assuring that should the loan go into default they will reimburse the lender for between 50% – 80% of the principal balance. Therefore the interest rates on SBA guaranteed loans can be expected to be higher than normal going bank rates; usually 2.5% to 4.5%.
Three Popular Accessible SBA Loan Programs for Small Businesses
1. SBA Small Loan Advantage Program:
- Quick Turnaround
- Start-ups
- Fast working capital
- No collateral required
- $5,000 to $25,000
- Application forms are available on line at:
- Superior Financial Group www.superiorfg.com Send applications to: Ms. Sue Malone, Walnut Creek, CA; Telephone (877) 675-0500
- U.S. Bank , Nashville, TN; www.usbank.com Ms Janetha Brown; Telephone (615) 733-0720
- Celtic Bank, Panama City, FL; www.celticbank.com Fred Crispin; Telephone (850) 236-5166
2. SBA 7(a) Loans
- Shown illustrated at http://www.sba.gov/category/navigation-structure/loans- grants/small- business-loans/sba-loan-programs/7a-loan-program of the SBA web site.
- Maximum Loan $5,000,000
- Maturity: 25 years for real estate, up to 10 years for equipment (depending on the useful life of the equipment) and generally up to seven years for working capital.
- Basic uses for 7(a) loan proceeds include:
- provide long-term working capital to use to pay operational expenses accounts payable and/or to purchase inventory
- Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
- Revolving funds based on the value of existing inventory and receivables, under special conditions
- To purchase equipment, machinery, furniture, fixtures, supplies or materials
- To purchase real estate, including land and buildings
- To construct a new building or renovate an existing building
- To establish a new business or assist in the acquisition, operation or expansion of an existing business
- To refinance existing business debt, under certain conditions
- Comprehensive Business Plan Required
- Other information and/or documents may be required by the lending institution
- Applications and funding are provided through SBA Preferred Lenders and participating local banks. Preferred Lenders in East Tennessee include:
- Bank of America
- Regions Bank
- SunTrust Bank
- US Bank
- BB&T
- First Financial Bank
- Vantage South
- There are no Guarantee Fees or Servicing Fees on SBA loans through September 30, 2014.
3. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION: Knoxville Area Urban League; 1514 East 5th Avenue, Knoxville, TN 37917; Felix Harris, Telephone (865) 524-5511
For businesses that cannot qualify for loans through the normal channels this resource is available.
- Loans $2,500 to $75,000
- Maturity: Up to 10 years
- Interest: Depends upon circumstances (size, maturity, disposable income, debt-to-income ratio, etc) – 3% to market Rate
- Fees: Application fee $50; Origination fee 1-2% of loan
- Credit Report: $15
- Third Party Appraisals $275-$575
- Title Review $50-$70
4. SOUTHSTAR CAPITAL; 830 Lowcountry Blvd. Suite 201, Mount Pleasant, SC 29464 Matt Shallenberger, Telephone (865) 216-2069 – www.southstarcapital.com
- Accounts Receivable Financing (25k – 2MM)
- Purchase Order Financing (25k – 2MM)
- Equipment Financing (10k – 1MM)
- For those businesses that need short term Cash Flow financial assistance or longer term fixed asset funding
