Small Business Administration (SBA) Loans don’t have to be confusing

American Bank of Freedom Specializes in Small Business Administration (SBA) Loans Made Easy

Many business owners and entrepreneurs believe that Small Business Administration (SBA) loans are hard to get — but SBA loans don’t have to be frustrating or difficult to obtain.

When a business owner is seeking an SBA loan, the first step is to understand what an SBA loan is.

What Is the SBA, and What Is an SBA Loan?

The SBA is a cabinet-level agency of the United States government that was formed in 1953 to provide financing for small business owners who don’t meet conventional lending policies. The SBA 7(a) loan is the agency’s signature product. Generally, under the 7(a) program, the SBA guarantees 75% of loan balances made by a participating lender (usually a bank). Because of the SBA’s guarantee, banks can be more flexible with credit and structuring guidelines.

The SBA’s program grants thousands of small businesses the opportunity to start, grow, or sell their businesses by providing much-needed capital that may not be available to them otherwise.

Features and Benefits of SBA Loans

Business owners and entrepreneurs interested in securing a loan can consider the features and benefits of SBA loans:

• SBA loans are not based on collateral. (Collateral shortfall is the most common reason American Bank of Freedom issues SBA loans.)
• SBA loans can provide lower payments due to longer terms and amortization than a bank would normally provide without a guarantee.
• The term is determined by the purpose of the SBA loan.
• SBA loans may require a lower cash injection than conventional loans.
• SBA loans can be projection-based.
• SBA loans never include a balloon payment, as all loans must be fully amortized.

How Can You Use an SBA Loan?

Business owners and entrepreneurs can employ SBA loans for a variety of uses, including:

• Ownership transitions, including partner, family, long-term employee, outsider, and employee stock ownership plan (ESOP) buyout
• Working capital needs beyond support from a normal borrowing base
• Machinery, equipment, furniture, fixtures, and leasehold improvement investments
• Debt refinancing to improve cash flow
• Commercial real estate purchases
• Franchises and startups

Questions to Ask When Choosing an SBA Bank or Lender

Once you understand SBA loans, you have a very important decision to make: which SBA lender you’ll use. The following questions can help you identify an experienced lender:

What level of experience does the bank or lender have with SBA loans?

The SBA process can be complex — and even intimidating. An experienced SBA lender will guide you through the process much more effectively and efficiently. If your lender is not experienced with SBA loans, it could become a hindrance due to unnecessary delays and denials.

Each SBA district office can provide a list of leading lenders in your area. Central and Eastern Missouri’s “Small Business Resource Guide” includes options in St. Louis. It’s best to look at lenders from both the current and prior year (as the SBA’s year ends each September). This will give you a good idea of who the most experienced lenders are.

The SBA’s St. Louis District Office website provides more helpful information. Business owners outside St. Louis can find the nearest district office here.

Is your bank or lender an SBA Preferred Lender?

The SBA carefully designates Preferred Lenders Program (PLP) status to certain lenders that meet stringent requirements. When a lender receives Preferred-Lender status, the SBA has delegated its approval authority to the lender. On the other hand, non-Preferred Lenders must send SBA application packages to a processing center for approval. This can add weeks to the SBA loan approval process.

Why Choose American Bank of Freedom for SBA Loans?

American Bank of Freedom’s first step in helping you isn’t asking how much you need to borrow. Rather, our professionals want to know what you’re trying to accomplish. Through this listening process, we can design an SBA loan that most closely meets your needs.
Here’s how American Bank of Freedom can make the SBA loan application process easier:

1. Our Dedication

The intimidation of a government program could create anxiety for clients getting an SBA loan. However, when clients work with a lending team that specializes in understanding SBA loans, they benefit from the team’s distinct focus.

Unlike some larger or inexperienced SBA lenders, we have a dedicated SBA Division and Board commitment to the SBA program. In fact, we emphasize hiring highly skilled SBA professionals, which leads to a more streamlined loan process. This dedication pays off: We were Eastern Missouri’s leading SBA lender in 2018 and 2019.

2. Our Knowledge

Most banks offer SBA loans, but many provide those loans without the appropriate knowledge surrounding a product or offering. Likewise, larger banks and inexperienced SBA lenders tend to be less creative and knowledgeable about SBA lending than smaller, more specialized lenders. Because SBA loans are not truly a priority for larger banks and inexperienced SBA lenders, mistakes and oversight during the process can delay funding.

On the other hand, American Bank of Freedom’s experienced SBA staff is ready to walk you through all steps of the process. We know the SBA program well, meaning our professionals can provide solid answers early in the assessment stage. The background knowledge saves time and avoids frustration. We are also up to date with changes and improvements made to the SBA’s popular 7(a) program, which can expedite financing for new businesses or acquisitions.

3. Our Individualized Approach

Much of our SBA team’s role involves educating prospective borrowers. However, we’ll never bombard you with explanations of procedures from the SBA’s 500-page manual. Our experts dispel SBA loan myths and give you the best possible individual route.

Our first step is to work with you to define business goals. After, our professionals can determine whether an SBA loan is a good idea for you. If the program is a fit, we’ll help you take advantage fully.

The SBA loan program is open to most industries. However, many banks avoid certain businesses or have rules regarding equity and how much to invest in certain types of transactions. We don’t take broad industry stances; our primary concern is whether your business is on the SBA’s ineligible list. To stay fair to you, we consider each case individually and give you full focus.

4. Our SBA Preferred-Lender Status

Because American Bank of Freedom is an SBA Preferred Lender, we can secure your loan instead of making you wait for SBA approval. This results in quicker loan approval times and much less uncertainty during the SBA loan approval and closing processes. In many cases, we send commitment letters before other banks have fully vetted your request.

Securing Your SBA Loan

The SBA loan process can certainly be complicated. American Bank of Freedom's team of SBA specialists will guide and educate you along the way to ensure success. After all, we specialize in SBA loans made easy.

To get your application on the fast track to approval, talk with the SBA experts at American Bank of Freedom. 

Our Team Secure File Transfer

SBA Financial Classes