Financing and Capital Markets

Think You Know SBA Financing?

Businesswoman looking out of a window

SBA (Small Business Administration) lending continues to widen its reach as a preferred source of business financing. With expanded terms, smaller loan sizes and use of technology in loan processing, the SBA and its financial institution partners can provide cash to even more expanding businesses.[i] Business executives are increasingly discarding their outdated assumptions about SBA loans and recognizing the attractiveness of today’s SBA programs.

Consider four reasons you should give SBA lending a look:

1: Your business doesn’t qualify for traditional lending

Insufficient operating history, lack of collateral or down payment and the inability to fund short-term loan payments with existing cash flow are all reasons that many small businesses do not qualify for traditional loans. However, these are the exact reasons that businesses may qualify for an SBA loan. Many SBA loans offer flexibility for longer terms to make payments smaller and more affordable. Others require no collateral or down payment conditions for certain types of loans, including financing for retail or real estate. Undercapitalized growth companies are in a sweet spot for the flexible terms and requirements of SBA loans. In addition, recent adjustments to SBA size standards and loan amounts allow even more businesses to qualify for programs with longer repayment terms.

2: SBA loans have more flexibility in use of funds

The SBA backs a wide variety of loans, for example:

  • SBA 7(a) program loans allow financing for commercial real estate, "goodwill," working capital, equipment, acquisition and/or improvements all in one package with flexible terms and rates.
  • SBA Express Program offers a line of credit or term loan that is an affordable option for companies that generate trading assets.
  • U. S. Department of Agriculture loan programs are available in many rural areas with a wide range of state and county level options.
  • Exporters may get loans quickly on favorable terms with SBA Export Express loans or finance their short-term capital needs, such as inventory purchases or financing receivables, through the Export Working Capital Program.
  • Commercial real estate owners may qualify for low down payments and flexible spending options through the SBA 504 CDC loan program.

3: Streamlined SBA paperwork

Recent government programs designed to accelerate small business lending have simplified the application process, and preferred bankers will help business owners complete the paperwork. SunTrust provides specialized SBA Business Development Officers who apply detailed SBA knowledge and experience to take the pain out of the application process and move financing to approval quickly.

4: Fast turn-around for SBA loan funding

Many owners don’t understand how fast SBA loans can happen, particularly given recent programs designed to accelerate and streamline small business lending with preferred lender banks. Typical turnaround time on a loan 45-60 days. Many banks with SBA expertise have streamlined their underwriting processes and secured “fast track” status for loan guarantees from the government. It is important to look at the experience and volume of SBA loans written by the lending institution.

Don’t slow your company’s growth.

Talk to your SunTrust Relationship Manager to find the flexible SBA financing you need to get your business going.

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.