SBA Loans

The Small Business Administration (SBA) is a federal agency dedicated to strengthening America’s small businesses through initiatives such as the SBA loan program.

Under the SBA loan program, the US Government guarantees a large percentage of the loan as added security for the bank. Because the risk to the lender is decreased, this encourages them to lend the small business money with terms more favorable to the borrower. These more favorable terms may be:

• Easier qualification
• Lower down payment
• Lower interest rate
• Longer terms (or maturity)
• And others
   

• Business acquisition
• Business expansion
• New construction
• Purchase of land or buildings
• Purchase inventory, equipment, machinery, furniture, fixtures, supplies, and materials
• Working capital
• Partner buyout
• Debt refinancing
• Franchise financing
   

Thomaston Savings Bank can help you secure financing up to $5,000,000.

The maximum allowable interest rate by law is WSJ U.S. Prime Rate + 2.75%.

• Up to 10 years for equipment, refinance, leasehold improvements, or business acquisition
• Up to 25 years for real estate
   

• 0% for a business expansion or working capital loan.
• 10% down payment for a business purchase.

• Cash
• Home equity line of credit
• Outside investor or business partner
• Gift from family member or friend. We can send you a sample Gift Letter upon request.
   

There are no set credit score requirements for the SBA loan program.

• Must be a legal US business
• Must have positive cash flow for the last two years
• If no cash flow, or no positive cash flow, loan will be considered a “projection” loan or “startup” loan.
   

The SBA will require that the borrower pledge available collateral to help secure the loan. However, business owners with limited collateral may still be eligible to apply for an SBA loan.

To be considered for an SBA loan, the business must be for-profit, must operate and be physically located in the U.S. or its territories, and must meet the SBA size standards. A vast majority of businesses in the United States are eligible to apply for SBA loans. To qualify, the business must have a tangible net worth of $15 million or less and have an average net income of $5 million or less. The business should also have sufficient historical cash flow to show that it can pay back the loan, have a sound business purpose, and its owners must be U.S. citizens or permanent residents who have a strong borrowing history (credit score).

A business plan is a great tool for building a lender’s confidence in you as a borrower. Our team has expertise across all industries and will assist you in completing your business plan.

While the exact paperwork depends on the type of SBA loan program you are applying for, to start the loan application process you will be asked to provide detailed business information, a loan request, a copy of your last three years’ federal tax returns (both business and personal), along with your most recent business financial statements. The goal is to get an understanding of what the business is, how you intend to use the funds, and to ensure that the business can pay back the loan. In addition, you must complete our SBA loan application forms, which include a personal financial statement.

Yes, SBA loans work very well for refinancing existing business debt. There are quite a few online and traditional lenders who provide short-term business loans that feature high-interest rates. SBA loans can help by increasing the loan term and lowering the interest rate of the existing loan, which can significantly reduce monthly payments and help improve business cash flow.

Probably the biggest misconception people have about SBA loans is that obtaining an SBA loan is a lengthy process due to the amount of documentation that is required and the amount of time needed to review an SBA loan request. If you are working with an SBA Preferred Lender, such as Thomaston Savings Bank, that has an experienced staff who know the process, you should be able to get an SBA loan in a fast and efficient manner.