May is National Small Business Month, a time to recognize the vital role entrepreneurs play in driving local economies and shaping our communities. We asked Lisa Franxman, SBA Specialist at Drake Bank, to talk about how SBA loans can support small business growth—and why working with a community bank can make all the difference.
What exactly is an SBA loan, and how does it work?
An SBA loan is a government-guaranteed loan that allows a client to obtain funding when conventional funding is not available. The application process is like a typical conventional loan.
What types of businesses are typically a good fit for SBA financing?
Start-up businesses, businesses that would like to expand, and business acquisitions.
What should business owners prepare before applying for an SBA loan?
It depends on the type of transaction. A start-up, for example, would need a business plan and projections with written assumptions. Businesses that want to expand would also need projections with written assumptions. These also take more time to complete due to the document requirements from the SBA, so they should be planned accordingly.
How does working with a community bank like Drake Bank enhance the SBA loan experience?
One-on-one handling of the loan request: the client deals with the relationship manager for the life of the loan versus being transferred to a portfolio manager.
As we celebrate small businesses this month, what advice would you give to entrepreneurs exploring SBA loans for the first time?
Start the process early so that they are best prepared to apply for the SBA loan. Start-up ventures take time and preparation, and talking to a lender early on can help them get started with the resources they will need. SBA.gov has many resources, including a business plan guide.
