City Lifestyle

Want to start a publication?

Learn More

Featured Article

Why an SBA Loan May Be Right for Helping Make Your Small Business Dreams a Reality

Article by Lisa Valentine

Photography by Provided

Originally published in Franklin Lifestyle

Have you ever dreamt up the perfect business idea but got cold feet when it came to making your dream a reality? For many people who want to bring their small business dreams to life, the monetary aspect of financing a small business startup can be overwhelming. An SBA loan—a loan guaranteed by the U.S. Small Business Administration —could be the right solution to get your small business up and running.

“SBA lending is a great place to start or expand a business,” says Mark Niethammer, CapStar Banks’s Director of Government Guaranteed Lending for the greater Nashville area. “With full-term financing options, minimal equity requirements, and flexibility for the unknown, you are putting yourself in the best possible situation to succeed. One of the most rewarding things about my job is helping people with a vision turn their dreams into reality.”

There are many reasons that SBA loans could be a good approach for those looking to finance a small business. “SBA loans are used primarily for businesses that can’t secure traditional financing or the financing that is available is on very egregious terms,” explains Niethammer. “The goal behind the SBA program is to get capital in the hands of small business at an affordable rates.”

SBA loans can be applied for through an SBA lender, which in many cases could be your bank. While the paperwork is extensive and there are specific requirements that must be met to be eligible, there are many reasons why a SBA loan may be a good fit for launching or expanding your small business. First, there are lower equity requirements for an SBA loan. With the minimum equity requirement being only 10%, this makes it more accessible than conventional financing, which can require 25% or more equity out of the gate.

Another positive point about SBA loans is that they typically offer longer terms than traditional commercial loans, resulting in a lower monthly payment. Furthermore, SBA loans are known for their single default provision. “The only way a financial institution
can call an SBA note is for non-payment,” explains Niethammer. “As long as you never miss your payment, you’re in control.”

Unlike many commercial loans, an SBA loan is a full-term loan that behaves a lot like a consumer mortgage. “With full term financing, it takes the refinance risk off the table and allows small business owners to really just focus on their business and not the mechanics of financing,” says Niethammer. “…[T]here’s a bit of lifeline that happens with the SBA that may not occur with traditional financing, which is the ability to do up to 90 days of a deferment.”

Niethammer provides real-life examples of people his team has worked with who have had to defer, including someone who took out a loan and shortly after had their wife get diagnosed with cancer or another person who was unable to work due to an industrial
accident. “So, without any question or concern, we have the ability to stand behind the customer and help support them,” he explains regarding the deferment option. “It’s a great safety net built into the program.”

So, if launching a small business is one of your goals for the new year, see if applying for a SBA loan may be right for you!

  • Mark Niethammer