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Loans & Credit

SBA Loans

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As an award winning SBA Preferred lender, our experienced business development officers can help you discover loan programs designed for business owners who may have challenges qualifying for a conventional bank loan. Are you planning to start a business or expand an existing business and do not qualify for a traditional bank loan? If so, contact one of our experienced Business Development Officers today for a personal review of your plan and the best loan to suit your needs.

Features

Generally, SBA loans come in two forms:

SBA 504 Loan

The US Small Business Administration 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market interest rates. The 504 program works by distributing the loan among three parties. The business owner puts in a minimum of 10%, a conventional lender (typically a bank) puts in to 50%, and a so-called Certified Development Company (CDC) puts in the remaining 40%.

SBA 7(a) Loan

If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.

  • Possible Benefits of an SBA Loan
  • Longer terms than most conventional loans
  • Lower equity requirements
  • Lower debt service coverage requirements
  • Less restrictive collateral requirements
  • Can be applied to start-up businesses, approved franchises, equipment/inventory, commercial real estate, construction, business acquisition or expansion
SBA 7(a) Loans

The 7(a) Loan Program is the SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes. The SBA does not make loans itself, but rather guarantees loans made by Consumers National Bank. In this way, taxpayer funds are only used in the event of borrower default. This reduces the risk to the lender but not to the borrower, who remains obligated for the full debt, even in the event of default.

An SBA 7(a) loan can be used to:

  • Purchase an existing business
  • Acquire land or a building
  • Buy equipment
  • Expand to another location

SBA 7(a) Benefits

  • Longer terms than most conventional loans
  • Lower equity requirements
  • Lower debt service coverage requirements
  • Less restrictive collateral requirements
  • Can be applied to start-up businesses, approved franchises, equipment/inventory, commercial real estate, construction, business acquisition or expansion
SBA 504 Loans

A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs are located nationwide and operate primarily in their state of incorporation (Area of Operation). CDCs work with the SBA and Consumers National Bank to provide financing to small businesses through the CDC/504 Loan Program, which provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.

Typically, a 504 project includes:

    • A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost
    • A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost
  • A contribution from the borrower of at least 10 percent equity

A 504 loan can be used for:

  • The purchase of land, including existing buildings
  • Financing of improvements, including grading, street improvements, utilities, parking lots and landscaping
  • The construction of new facilities or modernizing, renovating or converting existing facilities
  • The purchase of long-term machinery and equipment

A 504 Loan cannot be used for:

  • Working capital or inventory
  • Consolidating, repaying or refinancing debt
  • Speculation or investment in rental real estate

SBA 504 Loan Benefits

  • Low Down Payments—preserve precious capital for operations as low as 10% Down
  • Long-Term Fixed Rates—help to maximize cash flow
  • Low Interest Rates—below market fixed rates providing the business owner with the ability to accurately predict future capital needs
  • Up to 20-Year Fully Amortizing Terms