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SBA Loans

The U. S. Small Business Administration’s Guaranteed Loan Programs are intended to help your business grow and prosper. An SBA loan can be used to purchase or start your own business. The loan can also be used to expand an existing business by providing funds to purchase real estate, equipment and/or inventory, or construct a new facility or to increase working capital or provide financing for leasehold improvements. Almost any type of “for profit” business is eligible for an SBA guaranteed loan, whether a sole proprietor, partnership or corporation. Small business to the U.S. Small Business Administration is not small!! Retail and service businesses can have annual sales up to $20million annually in most instances. Manufacturers are usually eligible with up to 1,500 employees and wholesale operations can have up to 100 employees.
The Small Business Administration has many programs available; the two programs primarily used are the 7(a) loan program and the 504 loan program.

Under the 7(a) program, FirstAtlantic Bank extends a loan directly to a small business while the SBA guarantees a portion of the loan. The 7(a) loan program is widely used as it is the most flexible in the use of loan proceeds as listed above, as well as the inclusion of refinancing existing debt. Primary considerations in the SBA loan decision process are the availability of the business to repay the loan from cash flow and the good credit of the owners. All business owners of 20 percent or more are required to guarantee the SBA loan.

Under the 504 program, in a typical scenario, two separate loans are granted: 1) FirstAtlantic Bank extends a conventional loan, usually for an amount equal to 50% of eligible project costs, with a fully-amortized term of 10-25 years, depending on loan proceeds, and 2) A Certified Development Company (CDC) makes a loan, typically for 30-40% of eligible project costs, with a term of 10 or 20 years, also fully-amortized, depending on the loan proceeds. The buyer injects the remaining 10%. If the property is considered "special use" (such as a restaurant or hotel, etc.), the buyer will be required to inject an additional 5%. Start-up businesses require another 5% cash injection. Both variable and fixed-rate options are available. Unlike 7(a) loans, 504 loans may be used only for fixed asset purchases, such as land and building, machinery, and equipment, and no refinancing of existing debt is allowed.

All lenders are not the same!!! Each lender has its own credit philosophy. While their credit guidelines must comply with SBA rules, lenders can impose stricter guidelines than the SBA and most do. Most credit criteria vary from lender to lender, including: advance rates, historic cash flow, types of properties financed, management experienced required, etc. Get to know FirstAtlantic Bank! We strive to understand your business and what best suits your situation. FirstAtlantic Bank wants to be your SBA lender and your source for all your banking needs. Contact us today!

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