Small businesses are the backbone of our country, and PeoplesBank has been helping small businesses succeed since 1864. We’re dedicated to helping you grow by providing customized solutions and the financing you need for your unique business. PeoplesBank is an approved SBA Guaranteed Lender that specializes in 7(a), 504 (Certified Development Program) and Express loan financing. With these specialized programs, we can provide the financing you need to purchase a building or existing business, finance a partner buyout, and virtually meet any other business need. Plus, these loan programs feature low down payments and longer terms that make qualifying easier. Whether you are looking to get into business, grow, diversify or change altogether, our dedicated lending team will take the time to listen to your needs, recommend sound strategies, and help implement them.
SBA programs are distinguished by their different uses of the loan proceeds, their dollar amounts, and the requirements placed on the lender. Review the overview of each program below and choose which one is right for your needs.
The 7(a) Loan program is the SBA’s primary business loan program. It is the most frequently used non-disaster financial assistance program because of its flexibility in loan structure, variety of uses for the loan proceeds, and availability. The program has broad eligibility requirements and credit criteria to accommodate a wide range of financial needs. PeoplesBank funds the loan and SBA provides a guaranty on a portion of the loan balance. Currently, SBA provides a 75% guaranty on all 7(a) loans greater than $150,001 up to the max loan amount of $5million and an 85% guaranty on loans less than $150,000. The guaranteed portion of the loan is assessed an SBA guaranty fee that is due at closing. This fee is based on the loan’s maturity and the dollar amount guaranteed. The basic 7(a) loan is a term loan facility that is usually repaid with monthly principal & interest payments. The actual interest rate for a 7(a) loan guaranteed by the SBA is negotiated between the applicant and lender but is subject to the SBA maximums. Both fixed and variable interest rate structures are available. 7(a) loan maturities are based on the ability to repay, the purpose of the loan proceeds and the useful life of the assets financed. Maturities general range from 7-10 years for working capital, business start-ups, and business acquisition type of loans, and up to 25 years if the purpose is to acquire real estate.
The Certified Development Company Loan Program (SBA 504) is an economic development program that supports American small business growth and helps communities through business expansion and job creation. This loan program provides long-term, fixed rate, subordinate mortgage financing for acquisition and/or renovation of capital assets including land, buildings and equipment. Some refinancing is also permitted. The SBA’s 504 Certified Development Companies (CDC) work directly with the borrower and the lender to tailor a financing package that meets program guidelines and the credit capacity of the borrower’s business. Borrowers are required to make an injection of just 10% which allows the business to conserve valuable operating capital. A further injection of 5% is needed if the business is a start-up or new (less than 2yrs old), and a further injection of 5% is also required if the primary collateral will be a single-purpose building (such as a hotel). A 504 loan is structured in tiers. The lender finances approximately 50% of the project cost and receives a 1st lien position on the project assets (but NO guaranty); A CDC (backed by a 100% SBA guaranty) finances up to 40% of the project costs secured by a junior lien. The borrower provides the balance of the project costs. The CDC loan that is guaranteed by the SBA is set up on competitive fixed rate. The maturity of the loan is driven by the use of proceeds; funds used to purchase real estate can be termed out up to 20 years, heavy equipment 10-20 years depending on the useful life of the equipment.
The SBAExpress Loan or Line of Credit is a flexible smaller loan up to $350,000 that allows the Bank to use its own forms, analysis and procedures to process, structure, service and disburse the guaranteed funds to the borrower. When structured as a term loan the proceeds and maturity follow the same guidelines as a Basic 7(a) loan. When structured as a revolving Line of Credit the requirements for payment of interest and principal are at the discretion of the lender and the maturity can not exceed 7 years. Both types of Express loan facilities carry a 50% guarantee of the loan balance. The
guaranteed portion of the loan is assessed an SBA guaranty fee that is due at closing. For loans up to $150,000 the guaranty is assessed a 2% fee and for loans $150,001 up to $350,000 the guaranty is assessed a 3% fee.
More SBA Lending Information
The U.S. Small Business Administration (SBA) Lending Program was founded by the Federal Government in July of 1953. Its main function was to aid, counsel, assist and protect in so far as possible, the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA is committed to empowering potential entrepreneurs and small business owners. It has grown significantly in terms of total assistance provided and its array of programs have been tailored to encourage small enterprises in “ALL” areas. SBA ‘s programs now include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and armed forces veterans. SBA also provides loans to victims of natural disasters and specialized advice and assistance in international trade. Every year the SBA and its nationwide network of resource partners help millions of potential and existing small business owners start, grow and succeed!