Grow your small business with special SBA loan offers

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As the economy reopens, many small business owners are willing to invest again in growing their businesses. In Bellingham, the city center is brimming with visitors and local events, returning to a sense of pre-pandemic normalcy.

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USA Small Business Association (SBA) is committed to helping businesses looking for additional working capital or expanding their operations.

During the pandemic, the SBA came to the rescue of many small businesses by offering loans under the Payroll Protection Program (PPP). Although the PPP expired on May 31, 2021, the SBA still offers many extremely lucrative lending programs.

The SBA is currently offering extended exemptions for lending options through September 30, 2021. First Fed account managers are working to make these loans a reality for Watcom County businesses.

Why SBA Loan?

Compared to conventional loans for 3 or 5 years, SBA credits they are easier to qualify for and can also offer lower monthly payments given their longer time frames. The loans are for small businesses that the SBA determines to meet industry requirements for both employee size and annual income. Most companies with fewer than 500 employees and average annual revenues of less than $ 7.5 million that can demonstrate a growth trajectory are eligible.

SBA loans are ideal for these businesses, whether the goal is to open, expand or acquire another business. They also allow small businesses to use additional working capital to purchase inventory, equipment, or real estate.

The two most common types of SBA loans are 7 (a) loans and 504 loans. Overall, more than 7 (a) loans have been disbursed than 504, but the latter represent a large total dollar amount in loan funds.

Lirio Perez, Whatcom County First Fed commercial relations manager and SBA lending expert, says 7 (a) loans are ideal for any business that needs additional capital, refinancing debt, or acquiring equipment, real estate, or other business. However, these loans do not exceed $ 5 million.

Meanwhile, the 504 loan is narrower in size but could be much larger in dollar terms.

“504 allows you to get the same $ 5 million in funds from the SBA, but the total loan amount could be higher with additional funding from a financial institution such as First Fed,” says Perez.

The 504 loan cannot be used for refinancing or working capital, and instead focuses specifically on the purchase or improvement of land / buildings, as well as the purchase of machinery or equipment. This makes them ideal for smaller companies looking for faster and more significant growth. “No matter how large or small your loan, it can have a huge impact on the future of your business,” says Erica Slatt, SBA Commercial Relations Manager at First Fed.

Erica Slatt, SBA’s Commercial Relations Manager with First Fed. Photo: Jennifer Richard

Why now?

Funding under the Federal CARES Act is currently removing the guarantee fees on 7 (a) SBA loans by the September 30 deadline, saving borrowers up to 3.5 percent of their guaranteed loan amount. The SBA also promises to pay principal and interest up to $ 9,000 per month for three to six months, depending on the terms of the loan. After the three-month period, 504 borrowers – depending on the industry – may qualify for an additional three months of these subsidies.

Even the chances of getting an SBA loan are improving right now, with a guaranteed approval rate of up to 90 percent. Given these generous incentives, Perez says it’s no surprise that he sees additional demand from Washington state businesses seeking SBA loans.

“I think the market as a whole is still interested in taking advantage of the low interest rates we are finding,” he says. “A lot of people who sat on the sidelines before COVID say, ‘Hey, this is the interest rate environment that we want to fix something on,’ and that’s why they are applying for SBA-type loans.”

Since loans must be approved by September 30 to be eligible for CARES benefits, Perez recommends applying as soon as possible. The complexities of working with a government agency such as the SBA and the base number of weeks required to complete the loan application process leave limited time for new applications to be submitted.

A little less difficult

The first step to applying for a small business loan through First Fed can take several different forms, from employee referrals to online inquiries or phone calls. Regardless of the method, Perez said, clients can expect a quick response and professional judgment from an SBA consultant on the best way forward.

“If they knock on my door, I’ll spend most of the conversation trying to really understand what the ultimate purpose of the transaction is,” he explains. “What are you trying to achieve? Then I will encourage them in one direction or another, based on the optimal result for their long-term goal. “

Lirio Perez, Commercial Relations Manager, First Fed. Photo: Radley Mueller

Using the First Fed Loan Team to streamline the SBA application process is all about making the complex process easier for the borrower. And, I hope, it will help them achieve their goals in order to bring their business to the next level.

“First Fed loves to support local businesses,” says Perez. “We’re here to help business owners take advantage of the financial opportunities available.”

Ready to discuss your options? Schedule a consultation with Perez, Slatt and other SBA experts from First Fed (FDIC member): https://www.ourfirstfed.com/business/loans/sba-loans

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