What is an SBA Loan?
The entrepreneur’s piggy bank.
As one of the top SBA 504 long-term fixed asset lenders in Minnesota, Brickwell is where you’ll find the extra capital to finance the purchase of new real estate, or upgrade your machinery and equipment, maintain inventory, or pad your working capital.
An SBA loan provides the perfect answer for many entrepreneurs and existing small business owners who want to finance a startup, secure longer terms than conventional financing, or decrease their down payment.
The Small Business Administration (SBA) provides short- and long-term loans to small businesses that have difficulty obtaining financing on reasonable terms through typical lending channels. However, the SBA does not provide direct loans.
Rather, the agency provides guarantees to loans available through SBA's partner lending institutions, which includes many community banks (like us). Once you satisfy our requirements, you can ask for a guaranty from the SBA, unless you’ve been deemed prequalified based on your character, credit, reliability and experience (prequalification is for loans $250,000 or less).
When considering an SBA loan, ask yourself these questions:
1. Do I have a stake in the business? The way the SBA sees it, when you put your own money into something, you’re much more likely to do whatever it takes to see that it succeeds. Depending on the loan program, this translates into an investment between 25 to 50 percent of the amount requested. Sorry, 100% underwriting isn’t going to happen. Bottom line: If you want a $100,000 loan, you’ll need to prove you’ve got between $25,000 to $50,000 already invested in the business.
2. Do I have a strong business plan? Every business should have one. The SBA requires one. This way, they can sense if you’ve done your homework and know what you’re committing to (and competing against). How will your business make money? More importantly, how do you plan on repaying the loan?
3. Do I have a good personal credit rating? You need good credit to buy a house. The same goes for building a business. Since the SBA requires that you personally guarantee the loan, you must show a history of honoring and repaying debts on time. As an SBA partner, Brickwell will conduct a credit examination then submit the results to the SBA.