The Small Business Administration (SBA) is an independent agency of the federal government established in the 1950s to aid, counsel and assist America’s small businesses and provide support to disaster victims. Today, it assists more than 30+ million small businesses in the areas of finance, contracting and management.
The SBA works with lenders to offer loans to businesses that would not be able to do so through conventional means. For the business owner this gives them longer terms without balloons, increased leverage or the ability to create a start-up. To be eligible, type and size of the business are factors as well as character of the owners and key managers and credit history.
There are a variety of SBA solutions and navigating the program can be cumbersome. The right lending partner is key for a successful experience and proper SBA solution. With more than 30 years of expertise, Heritage Bank’s SBA team is willing to look at all types of businesses to determine the right SBA solution.
The SBA’s flagship program, the 7(a), enables a loan amount up to $5 million and can be used to purchase or refinance commercial real estate, equipment, inventory, working capital, business acquisition including a partner buy out, business debt refinance, start-up or expansion. The lender makes 100 percent of the loan and the SBA will guarantee up to 50 to 90 percent of the amount financed.
The 504 program has similar eligibility as the 7(a) but the proceeds are limited to purchase of commercial real estate (including land, improvements, grading, street improvements, utilities, parking lots and landscaping), and the purchase of long-term equipment.
Active and experienced lenders qualify for the SBA’s Certified and Preferred Lender Programs. This enables banks to approve loans on behalf of SBA resulting in an expedited loan closing. Heritage Bank’s Preferred Lender Program (PLP) status is the highest level of approval a lender can hold and permits a more streamlined and flexible loan application process and service requirements and expedited approval process. It also allows Heritage Bank to use its own underwriting and servicing policies.
As a preferred SBA lender, Heritage Bank loan experts spend time with customers to understand their business and find the right solution. It’s true the SBA can be a long and arduous process but if you have the right people with a long history in the program, it’s well worth the time.
For example, an architecture firm looking for a loan solution for a partnership buy-out had to close the deal in 30 days and was quoted 60-90 days by a large lender. At the last minute, Heritage Bank stepped in and was able to close the deal on time.
Because the SBA loan program has grown exponentially the last several years, there are more lenders than ever before participating in the programs. This means the business relationship is just as important as the transaction. Heritage Bank is committed to offering financial solutions that put customers and local businesses first.
About the Author
Christine Heckert is the senior vice president – SBA manager at Heritage Bank. Christine joined Heritage in 2014. She has been in SBA lending since 1988, and in 2008, she received the Financial Services Champion award from the SBA Seattle District. She has a Bachelor of Business Administration from Gonzaga University and is also a graduate of the Washington Bankers Association Executive Management Program. Christine also serves on the Technical Issues Committee and the Region X Liaison Committee for the National Association of Government Guaranteed Lenders, which is a trade organization for SBA 7(a) loans.
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