Privately owned and operated for-profit small businesses with $7 million or less in average annual receipts employ more than half of the private-sector workforce in the United States. To help support this important economic engine, the U.S. government created the Small Business Administration (SBA) loan program to provide important financing to small businesses.
What is an SBA loan?
SBA loans are provided through participating lenders, such as CIBC, to provide favorable terms to small businesses across the country. To qualify for SBA loans, business owners must be experienced and of good character, demonstrate the ability to repay the loan from business operations and have sufficient equity invested in the business to back the loan.
Why choose an SBA loan?
Unlike conventional lending standards, SBA loans offer funding for specific business needs, as well as real estate and operating capital, that may allow for longer terms, more flexible repayment options and lower down payments.
When determining if the appropriate financing should be looked at as an SBA loan, we look for common reasons to acquire SBA financing:
A loan request is not to be declined solely on the basis of inadequate collateral. In fact, one of the primary reasons lenders use the SBA-guaranteed program is for those small-business applicants that demonstrate repayment ability but lack adequate collateral to fully repay the loan if the loan defaults.
SBA guidelines require a 10% equity injection on new business purchases, which is significantly lower than traditional commercial lending requirements. In some cases, 25% equity injection can be required for business acquisition if there is more than $500,000 in goodwill as part of the transaction, and is being submitted under Preferred Lending Partner (PLP) status.
The SBA loan can extend amortizations past what traditional commercial financing will allow. Extended amortization examples include:
- Real estate: 25 years
- Equipment and refinance: 10 years†
- Working capital: 7 to 10 years
CIBC is an SBA National PLP ranked among the top 10% of SBA lenders nationally by volume. We work with companies across a variety of different industries to provide custom financing solutions to help meet their business needs.
Additionally, through industry specialization, market insight and relationships with mergers and aquisitions consultants, we have earned our national position as trusted advisor and industry expert for private-duty home-care companies and ophthalmic practices. With multiple strategic partners, we’re able to help our clients complete successful acquisitions.
As SBA banking clients, you can expect a personalized service team comprised of a:
- Relationship Manager
- Portfolio Manager
- Client Service Specialist
- Treasury Management Advisor
We believe in small business
While the government may define your business as “small,” we know that running your company and providing jobs in your community is no small feat. That's why we take the time to know you and your business, learn what matters most and provide the right banking solutions for you. Our dedicated SBA specialists and team review each deal to help expedite the process.
As an SBA National PLP, we have the ability to turn your application around more quickly with lending decisions made by the bank.