Bucks County Herald

Using SBA loans to fund growth


During my 30-year career in banking and business lending and 10 years of experience in the SBA financing industry, I have seen many small business success stories. Many of those were accomplished with help from the Small Business Administration (SBA).

Did you know that the successful Ben & Jerry’s ice cream company began with help from an SBA loan?

In the greater Philadelphia area, I have worked on four or five restaurant loans, which paved the way for successful enterprises. I remember helping a team in Pipersville acquire a $750,000 SBA loan to transform a former vacant building into a viable eatery, which, by the way, is still operating more than 10 years later.

People many times think of the SBA as a bank itself. The SBA does not directly fund loans, except in the case of disaster recovery situations, but instead guarantees a portion of the loan that the bank would otherwise decline. For folks who have been in business less than two full years, or for entrepreneurs unable to put down 20 to 30 percent of a typical business mortgage, an SBA loan is a viable alternative funding source. The idea is for the bank to provide a loan to a business owner that’s not able to get it from a conventional bank loan.

There are many instances when an SBA loan is the best option. Jeffrey Pugh, SBA loan officer at Univest Bank, will lead a Webinar Wednesday session for SCORE Bucks County on Jan. 24. He will discuss some of the ways the SBA can assist Bucks County businesses and entrepreneurs in starting and expanding their businesses.

From my experience working in small business lending, I can offer a few tips for business owners in need of funding assistance.

For starters, I suggest researching the available lending options. Talk to the lending institutions where you do your own personal or business banking and find out the borrowing criteria. It’s also a good idea to talk to your accountant, attorney and financial advisor to find out which banks they do business with.

In addition to researching available funding options, prospective borrowers should have an acceptable business plan. This is most certainly a requirement for any lender. If you’re unsure of how to write a business plan, the mentors at SCORE Bucks County provide invaluable insight, free of charge, to help business owners and entrepreneurs with this very important step.

Another important aspect of preparedness involves reviewing your personal credit report in advance of meeting with lenders. If there are any issues with your credit history, it’s best to address them before banks start seeking your credit rating.

In terms of SBA financing, I have found from experience that it’s most beneficial for borrowers to work with banks who are Preferred SBA lenders. A Preferred SBA lender has the most experience doing SBA loans. They can make all the necessary credit decisions and give a much faster response.

The SBA’s role in small business is multi-faceted. SCORE’s Jan. 24 Webinar Wednesday will attempt to address SBA funding and how it can be beneficial for local businesses. Learn more and register at buckscounty.score.org/event/sba-and-small-business.

Richard Kroger is a SCORE Bucks County volunteer and certified mentor. In his professional career, he worked for 30 years in the business financing industry, including 10 years as an SBA lender.



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