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SBA Loans
Fairfield County Bank and Ridgefield Bank, a division of Fairfield County Bank, are committed to helping small businesses prosper and grow. Our special designation as a "Certified Lender" from the Small Business Administration (SBA) enables us to significantly reduce the processing time of SBA financing for your business. Our experienced SBA Loan Specialists can advise you on a wide range of SBA programs, guide you through the entire loan process and provide you with a full array of other business banking options.
What is an SBA Loan?
An SBA Loan is guaranteed by the U.S. Small Business Administration that participates with banks in assisting small businesses with their growth and expansion plans. It enables entrepreneurs to obtain long-term credit on reasonable terms and conditions that otherwise would not be available.
Eligibility
To be eligible for SBA financing, a business must be operated for profit and meet the size standards set by the SBA. The SBA determines if the business qualifies as a small business based on the average number of employees during the preceding 12 months or on sales averaged over the previous three years. Call for details.
Note: Ineligible businesses include those that are engaged in lending, real estate development, pyramid schemes, gambling, illegal operations, speculation or investment. Charitable, religious and non-profits are also not eligible.
SBA Loan Options
7(a) Loans
SBAExpress Loans
504 Loans
SBA Loan Comparison Chart
7(a) Loans
- Offers term loans and commercial mortgages up to
$2 million.
- Ideal for expansion or renovation; construction of new facility; purchase land or buildings; purchase new equipment, fixtures, leasehold improvements; working capital; refinance certain types of debt, inventory acquisition.
- Terms offered:
- Working capital: 5 to 10 years
- Equipment: 7 to 10 years
- Real Estate: 15 to 25 years
SBAExpress Loans
- Offers financing up to $350,000.
- Provides access to SBA loan products including small business loans, lines of credit and mortgages
- The bank uses its own documentation and analysis with reduced documentation to make the decision without requiring the SBA’s review
- Ideal for expansion or renovation; construction of new facility; purchase land or buildings; purchase new equipment, fixtures, leasehold improvements; working capital; refinance certain types of debt, inventory acquisition.
- Terms offered:
- Working capital: 5 to 10 years
- Equipment: 7 to 10 years
- Real Estate: 15 to 25 years
- Revolving Lines of Credit: Up to 7 years
504 Loans
- Low fixed rate financing for total project costs up to approximately $4 million.
- The Bank will provide a first mortgage for 50% of the project costs; the SBA will provide a second mortgage for up to 40% of the project cost, and the Borrower will generally provide 10% of the project cost. The SBA portion cannot exceed $1.5 million.
- Provides long-term financing for fixed-asset projects such as acquire real estate; construction/renovation of facilities; purchase new machinery and equipment
- May not be used for working capital or inventory or to refinance/consolidate/repay debt
- Architectural and engineering costs can be financed reducing the number of financial stresses to the project budget.
- 10 to 20 year terms allow for lower payments enabling a business to cover large debt amounts
Interest Rates
Fixed and variable interest rate programs are offered. See the SBA Loan Comparison Chart for details.
SBA Guarantee
The SBA guarantee varies according to loan program. See the SBA Loan Comparison Chart for details.
Requirements
Past experience in the industry and the ability of management to successfully run a small business are required. If the loan is for a new business venture where historical results are not available, a feasible business plan needs to accompany the loan application. In addition, the requested business loan needs to be supported with a historical or projected cash flow providing adequate repayment of the loan.
| SBA Loan Products Comparison Chart |
| |
Basic 7(a) |
SBAExpress |
504 Program |
| Maximum Loan Amount |
Loan guarantee can not exceed $1.5 million. |
$350,000 |
504 portion of total project cost not to exceed $1.5 million or 40% of the asset being financed. $4,000,000 if project meets a public policy goal. |
| Eligibility |
Business generally must be operated for profit and meet SBA's industry-size standards which are based on average # of employees over the preceeding 12 months or the average sales over the previous 3 years.
Loans cannot be made to businesses engaged in investment or speculation. |
Business generally must be operated for profit and meet SBA's industry-size standards which are based on average # of employees over the preceeding 12 months or the average sales over the previous 3 years.
Loans cannot be made to businesses engaged in investment or speculation. |
Businesses that receive 504 loans are:
Small - net worth under $6 million, net profit after taxes under $12 million or meet other SBA size standards.
Organized as for-profit.
Any type of business: retail, service, wholesale or manufacturing.
Loans cannot be made to businesses engaged in investment or speculation. |
| Use of Proceeds |
-Expand or renovate facilities;
-Purchase machinery, equipment, fixtures and leasehold improvements;
-Finance receivables and augment working capital;
-Refinance existing debt (under some circumstances);
-Construct commercial buildings;
-Purchase land and/or buildings. |
-Expand or renovate facilities;
-Purchase machinery, equipment, fixtures and leasehold improvements;
-Finance receivables and augment working capital;
-Refinance existing debt (under some circumstances);
-Construct commercial buildings;
-Purchase land and/or buildings. |
Must be used for fixed-asset projects such as:
-Purchasing land and improvements;
-Constructing, modernizing, renovating or converting existing facilities;
-Purchasing machinery and equipment.
Cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. |
| SBA Guarantee Percentage |
Up to 90% of a loan. |
Not to exceed 50%
|
Lender funds 50% of the project with a 1st mortgage. SBA funds up to 40% of the project with a 2nd mortgage. |
| Maturity |
Working capital:
5 to 10 years
Equipment:
7 to 10 years
Real Estate:
15 to 25 years |
Working capital:
5 to 10 years
Equipment:
7 to 10 years
Real Estate
15 to 25 years |
10 or 20 years |
| Interest Rate |
In most cases not
exceeding 2.25% - 2.75% over prime
|
In some cases may be up to 2% higher than Basic 7(a) |
Fixed Rate |
| Collateral |
Business assets, personal guaranty mortgage on residence, life insurance |
Business assets,
personal guaranty
mortgage on
residence, life insurance |
Bank holds a 1st mortgage. SBA holds a 2nd mortgage on the assets being financed.
Personal guaranty
|
| Comments |
Start-up and change of
ownership usually inject 25% - 35% of capital required. |
Bank uses own
documentation, analysis and procedures without
needing SBA review. |
Long-term mortgage
financing for fixed
assets. Must meet
job creation/
retention requirements. |
To learn more about our SBA Loan programs, contact us at (203) 431-7455 or toll-free at 1-800-776-6518.
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