What the future of SBA small-business funding looks like in the San Francisco Bay Area
Until more than two years ago, the U.S. Small Business Administration might have been an unknown to many. COVID’s arrival in early 2020, and its economic impact, changed that. SBA programs geared up to help get businesses through the chaos.
Has this changed the role of the SBA in supporting small business? The Journal asked those whose jobs at area financial institutions include SBA loan programs to supply some answers.
What’s the program under SBA lending that you believe is perhaps underutilized, yet could be a great benefit to the small business owner?
Jeff Clark: I am not aware of any underutilized programs per se. Congress keeps having to appropriate additional funding to keep the 7A and 504 programs from running out of funds so I would say they are being well utilized.
Brian Kilkenny: The SBA 504 program provides a great benefit to business owners, and it seems to be underutilized. Redwood Credit Union was the No. 1 SBA 504 third-party lender by number of loans in the SBA’s San Francisco District (including the North Bay), and we’re a big believer in the program. It’s excellent for borrowers because it provides a longer term, fixed-rate option for acquiring or refinancing a business property.
Bob Thompson: I don’t think it’s a program so much as a resource, which are Small Business Development Centers. These organizations are staffed with seasoned business professionals ready and able to assist small businesses in a variety of ways, including preparation of operating projections, development of marketing programs and strategy, and general business planning and advice. And they do it for free.
George Mavridis: This is an important question. There are many SBA lending options to choose from and I would say it is about finding the right fit that addresses your financing needs, depending on the stage of your business.
As an active SBA lender, we spend a lot of time on educating consumers. Our goal is to ensure small businesses, customers and non-customer alike, have the available resources, information to make an informed financial decision for their business.
For example, a business owner looking to buy a building or invest in real estate for their business may find value in a SBA 504 loan program. A start-up business may find value in a SBA Express loan to help with operating debt and equipment financing, which recently increased the borrowing limit to $500,000.
Speaking to an adviser/banker about available tools and resources is always a great idea. Your [lending] advisor should be able to guide you through the entire process, provide helpful insight and find solutions.
Ole Tustin: While we mainly focus on the owner-occupied building purchase for small business, a newer and less utilized programs is the SBA’s commercial refinance programs. The new SBA 504 refinance program allows the borrower to more easily obtain some cash out for business working capital needs, in addition to refinancing into a new term loan of up to 25 years.
Previously, the SBA restricted most working capital or required very specific proof of uses for it.