Important Update: On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 resulting in specific temporary changes to the SBA loan programs. while temporary, the Act results in changes that make the consideration of SBA funding even more attractive in these unprecendented economic times. The changes are as follows:
- 7(a) loan guarantee fee elimination
- 504 Development company program fee elimination
- Increase in the SBA guarantee percentage to 90% on most SBA loans
As a Preferred/Express Lender, National Penn has the authority to approve, process and service loans without obtaining prior SBA* approval. The bottom-line is that you enjoy faster turnaround and better service.
Who qualifies?
Existing businesses, start-ups, and individuals purchasing a business can qualify for SBA loans, as long as they meet certain criteria.
Note: Businesses that engage in investment real estate, political lobbying, gambling, speculation or illegal activities are not eligible. Also, non-profit organizations, including churches, or businesses who have caused a loss to any Federal loan program will not qualify.
Loan uses:
An SBA loan can be used for a variety of small business funding needs. Some examples are as follows:
- Purchase, construction or renovation of owner occupied commercial real estate
- Equipment
- Working capital
- Inventory
- Business acquisitions and start up businesses
- Refinancing of existing business debt
- Leasehold improvement
Industry-based SIZE standards
Effective May 5, 2009, the SBA has amended the alternative size standard criteria for 7(a) loans on a temporary basis. The new rule expires on September 30, 2009. The new alternative size standard for 7(a) loan applicants is the same as that for 540 loan applicants and is described as follows:
“Including its affiliates, tangible net worth not in excess of $8.5 million, and average net income after Federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years not in excess of $3.0 million.”
Because some industries have alternative or unique size standards, talk to your Relationship Manager regarding possible exceptions to program parameters.
LOAN amounts and purpose:
The SBA offers a variety of loans that can be tailored to meet your specific needs:
- 7(a) Loan Program: Can finance up to 90% of real estate purchases or start-up ventures and 100% of equipment purchases, working capital, expansion and debt refinancing. Typically used for loans up to $2 million, terms ranging from 5 years up to 25 years, depending on use of funds and repayment ability, fully amortized loans with no call dates, SBA guarantee equal to 90% of loan amount or a maximum of $1.5 million.
- Express Loan Program: Can be used for term loans or lines of credit up to $350,000 with a maximum program term of 7 years, maximum SBA guarantee of 50%.
- 504 Loan Program: Used for building or equipment purchase only. Financing consists of 50% direct bank loan, 40% SBA debenture and 10% equity. Long-term fixed rate on SBA portion. Standard bank fees plus SBA fees apply. Equipment loan terms – 10 years, real estate – 20 years. Preliminary approvals done through an appropriate certified development company (CDC) with final approval from SBA. Substantial prepayment penalties apply to all 504 loans.
Choosing the right SBA Lender
When you're ready for an SBA loan, consider us. Our experienced Relationship Managers and SBA Specialists have helped countless small businesses just like yours. We offer competitive rates and terms, so you're sure to find a loan that fits your business needs.
What makes us the best source for SBA loans:
- Dedicated SBA department – the sole purpose of our knowledgeable SBA staff is to quickly identify the appropriate SBA program to fit our customers’ needs.
- Ease of transactions – SBA staff does the work from application to closing.
- Preferred/Express Lender status – a sign of our commitment to SBA and our high volume of loans we handle with dedicated SBA Specialists.
- Ties to the small business community – our company was built on financing small businesses. As an independent regional bank, our success is tied to the success of our local business community.
- Superior service – our Relationship Managers are dedicated to providing business solutions, not just
selling products.
