Financing and Capital Markets

Fueling Smart Growth with SBA Financing

Group of business people in meeting
 

With employment statistics improving and corporate profits on the rise, businesses are poised for growth. A National Center for the Middle Market report from Q2 2016 finds that almost 80 percent of middle market businesses are confident about the economic conditions in their local market. Additionally, middle market businesses experienced year-over-year revenue growth of more than 7 percent and saw productivity rise more than 3 percent.1 Businesses have learned to navigate the modest GDP growth rates and economic variability that characterize today’s business environment.

Finding growth capital

Confidence, revenue growth and productivity increases fuel growth plans and the need for capital to support that growth. SunTrust Research shows that 22 percent of business owners are looking to invest capital for their growth plans.2 There is evidence that capital is flowing to small businesses. According to the SBA, aggregate business loans have returned to levels last seen during the post-recession capital surge in late 2011.3

The conditions are good for businesses to launch capital-consuming growth initiatives such as investing in technology, purchasing real estate, acquiring competitors, buying out partners or expanding into new untapped markets. While the process of obtaining financing can be time-consuming and overwhelming, particularly for non-conventional lending needs, SBA financing can be an ideal source of flexible capital. For decades, the SBA has worked through banks to help businesses take action: to acquire, to restructure, to grow organically or to lower costs.

SBA loans are consistently growing as a viable financing source for small businesses. In fiscal year 2014, the SBA approved 52,044 loans for $19.19 billion generating growth of 12 percent in volume and 7.4 percent in loan value year over the previous year.4 The SBA has continued to grow with approved loan volume reaching $23.58 billion in FY2015 and $24.12 billion in FY2016.5 SBA loans provide affordable access to capital for businesses that want to maintain a working relationship with a local banking team. The program also provides advantages for veteran business owners including reduced fees. Continuing improvements to SBA loans make them a source that offers advantages including a broad range for use of funds, substantial flexibility around eligibility and a full suite of products to address diverse business needs

Understanding SBA financing

The SBA administers loan guaranty programs and support services through financial institutions such as SunTrust to support the growth of small businesses. The SBA guarantees a portion of the loan, allowing lenders to accept greater loan risk than with conventional loans.

SBA loans are known for their adaptability which features:

  • Flexibility in fund use allows financing of new and developing companies as well as non-real estate projects
  • Lending standards are less rigid than many conventional loan types, with adjusted business size standards and loan amounts
  • Options exist for longer term financing and low down payments
  • Collateral is treated favorably
  • “Business goodwill" can be designated as a financeable asset
  • Paperwork is streamlined for easier loan preparation and application submission

These characteristics translate into tangible benefits for growing businesses:

  • Increase or preserve liquidity to allow the small business to increase jobs and acquire capital assets
  • Flexibility to finance partner buyouts and acquisitions
  • Extended loan terms to keep monthly loan payment low and affordable
  • Uncomplicated terms with streamlined repayment requirements to improve access to growth capital
  • Financing structure designed to allow smaller businesses to qualify

The SBA loan application process has improved over the years. Streamlined paperwork simplifies the application process.

Dedicated banking teams specializing in SBA loans are available to help business owners compile the required financial documents efficiently and to gain approval quickly. The combined benefits of more flexible SBA options and an updated application make SBA loans a viable financing option to support many business plans. Talk to your SunTrust Relationship Manager or SBA Specialist to discuss your business plans for smart growth and how SBA financing can address your capital needs.

Are you ready to find out what SBA loans can do to boost your business?

Call your SunTrust Relationship Manager or visit the SunTrust Resource Center for more information.

1 2Q 2016 Middle Market Indicator, National Center for the Middle Market, 2016.

2 SunTrust Research, Q1 2018.

3 Quarterly Lending Bulletin:  Second Quarter 2015, Small Business Association Office of Advocacy.

4 "SBA Hits Another Lending Record Lending Record FY 2014", SBA.gov, accessed 11/16/2016

5 "SBA Lending Statistics for Major Programs as of 9/30/16" SBA.gov, accessed 11/16/2016

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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