Small Business Administration Lending

We're business builders. Many business owners find that a Small Business Administration (SBA) loan is a great option when growing their business. The Small Business Administration Virginia District Office released the latest loan results on August 31, 2018. Within the Community Banks peer group, Village Bank is consistently ranked as the highest SBA loan lender in total dollars borrowed. “This is a huge accomplishment for Village Bank,” stated Max Morehead, EVP Commercial Banking, "and it reflects our commitment to small business owners to help them grow and thrive.”

Why SBA financing is so attractive.

Whether it’s a SBA 7(a) loan or a 504 loan, there are many advantages that may include:

  • Low down payment. Keeps business liquidity accessible.
  • Longer loan amortization means. Lower monthly loan payment.
  • "Goodwill" can be financed. Expands access to capital for partner buyouts and business acquisitions.
  • Financing available for new and developing companies. Provides needed capital for growth.
  • Loan decisions are not collateral dependent. Business with insufficient collateral can be considered.

SBA 7(a) Program

75% guarantee on loans greater than $150,000.

  • Loan amounts. Up to $5,000,000.
  • Pricing. Both fixed and variable rates available.
  • Terms. Up to 25 years for commercial real estate transactions.
  • Fully Amortized. No balloon payments allowed in the program.
  • Use of Proceeds. Very flexible and thus, why SBA 7(a) is so attractive. The borrower can finance commercial real estate transactions, goodwill, working capital, equipment, acquisition, improvements all in one financing.
  • Collateral. Commercial real estate; inventory; and furniture, fixtures, and equipment.
  • Prepayment. Penalty limited to 5% - 3% - 1% for deals over 15 years.
  • Eligibility. Owner-operated and for-profit.

SBA Express Programs

50% guarantee.

  • Loan amounts. SBA Express: From $50,000 to $350,000.
  • Pricing. Variable rates up to Prime + 4.5%.
  • Terms. Line-Of-Credit is typically a 2-year revolver, then terms-out over the next 5 years, but can be used for term financing as well.
  • Use of Proceeds. Flexible in use of proceeds including working capital, inventory, equipment, business acquisition real estate and/or leasehold improvements.
  • Collateral. First lien on business assets.
  • Eligibility. Owner-occupied for-profit.
  • Product focus.
    • Working capital needs of the business.
    • Shorter term asset purchases.
    • Acquisitions of small CRE projects for "solid" companies.

SBA 504 Program

50% held by bank, 40% to be held by CDC, 10% equity from borrower.

  • Loan amounts. Up to $5,000,000.
  • Pricing. Both fixed and variable rates available. Certified Development Companies rates fixed for 25 years.
  • Terms. Fixed, up to 25 years on both 1st and 2nd mortgage pieces.
  • Down Payment. 10% standard. Add 5% for special use properties and 5% for start-up properties.
  • Use of Proceeds. Commercial real estate purchase/construction and purchase of long-term machinery or equipment.
  • Collateral. Additional collateral may be requested during the construction phase of the project.
  • Flexible. Can use 504 for Real Estate needs while providing 7(a)/Express loans for acquisition and working capital needs.

SBA Eligibility Requirements

In order to be eligible for a SBA 7(a) or 504 Loan, the Small Business Applicant must meet the following criteria:

  • Be an operating business.
  • Be an organized for-profit business.
  • Be located in the United States-based business.
  • Demonstrate a need for the desired credit.

Tom Kelley

Interested in learning more about SBA lending?
Contact Tom Kelley at 804.419.1236.