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Regions Bank: SBA loans have a number of distinct advantages

Robert Leard

Janita Stewart

Tyrus Sanders

By BECKY GILLETTE

One of the best methods for financing a new business or business expansion is an SBA loan. Many people, particularly those new to business, might not understand how many benefits there are to this option.

“SBA loans benefit Mississippi small businesses by providing what are typically more flexible payment terms,” said Regions Bank Metro Jackson Market Executive Robert Leard. “In addition to the potential for lower down payments, SBA loans will often allow longer amortizations, which allows for a lower loan payment, thereby freeing up more monthly cash flow for business operations. In the credit evaluation process, the lender is also able to use revenue and expense projections in conjunction with historical performance, which lets us incorporate anticipated improvement in the credit decision.”

Another advantage is that equity requirements for SBA loans can be as low as ten percent, depending on the specific characteristics and risk drivers of the individual request. And extended repayment terms are possible.

“You can get extended repayment terms with an SBA loan, which is another one of the advantages of using an SBA product. On real estate secured loans, payment terms can extend up to 25 years, versus the norm of 15 years for conventional loans. For equipment, the SBA will allow the bank to extend amortizations longer than ten years, if the useful life of the equipment supports that. In addition, SBA loans can be used for working capital.”

Regions Bank makes SBA loans for business acquisition, expansion, real estate, equipment and working capital. Leard said their team of bankers across Mississippi can provide access to these products in all our markets. The maximum SBA loan is $5 million for an SBA 7a loan and $12.5 million for an SBA 504 loan.   

Leard said businesses that are growing rapidly or may have less traditional equity are just some examples of businesses that could benefit from an SBA loan. Regions generally works with manufacturing, wholesale, distribution, retail and service companies on obtaining these types of loans.

Regions Bank is a preferred lender for the SBA.

“This allows Regions to approve the loan without seeking approval from the SBA first,” said Regions Commercial Banking Specialty Executive–SBA Director Tyrus Sanders.

“Because Regions passed the qualification process required to obtain this status, the SBA effectively delegates approval authority to Regions,” Sanders said. “Preferred Lending Partner status allows Regions to underwrite the loan, obtain an SBA Approval Authorization Number, close the SBA loan and process the payments based on the Loan Agreement.”

Sanders said they obtained the bank’s SBA Preferred status by closing a high number of SBA loans, completing the application process and by following the procedures of the SBA on a consistent basis.

Michael Amon, senior vice president and government guaranteed lending manager at Regions Bank said the SBA works with banks to help support lending to borrowers that potentially wouldn’t qualify otherwise. The SBA does not make small business loans itself, but with its banking partners, the SBA shares the risk that comes with lending money to a new or growing business.

A typical candidate for an SBA loan is growing and has demonstrated an ability to create cash flow and meet its obligations, but it may not have significant capital.

  “The SBA programs enable a growing company to finance its growth,” Amon said. “The SBA 7(a) loan program, which helps startups and existing small businesses with financing for a variety of general business purposes, is the SBA’s most popular program. Other SBA loan programs include the Microloan Program, which provides for small, short-term loans; the CDC/504 Loan Program, which provides for real estate and equipment loans; and, and the Disaster Loan Program, which provides for disaster loans for businesses of all sizes looking to rebuild after certain types of disasters.”

While SBA loan products can be used by almost any type of business for a myriad of purposes, businesses often seek an SBA 7(a) loan for business acquisition, a business looking to purchase office space in lieu of renting, small business equipment financing and partner buyouts.

When assessing SBA loan options for your company, Amon suggests leveraging your network of professionals and relying on a clearly documented business plan.

“It’s very important for business owners to have multiple business partners who help them make decisions about their company,” Amon said. “It is important that they leverage their relationships with their accountant, attorney and local bank, for example.  As they develop their plans for the future, they should seek counsel on the best direction for their business and the right kind of loan that might be able to help them achieve these goals.”

Regions has more than 115 locations in Mississippi. Regions Financial Corp. has about $128 billion in assets. Through its subsidiary, Regions Bank serves customers across the South, Midwest and Texas operating about 1,500 banking offices and 2,000 ATMs.

SBA Mississippi District Director Janita R. Stewart, said it is really gratifying to be able to see evidence of SBA’s programs and services benefitting so many small businesses throughout Mississippi.

“We would not be able to do this without the collaboration we’ve established and maintained over time and the support provided from our vast lending community, our critical resource partners, and the federal agencies throughout this country that are committed to supporting small business,” Stewart said.

More information about SBA can be found at www.sba.gov/ms or call the Mississippi District at 601-965-4378, or the Gulfport branch office at 228-863-4449.

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About Becky Gillette