Tips from our SBA Program Director

SBA Lending Basics

Over the past couple of years you may have heard of the SBA or Small Business Administration in the news.  During the pandemic the SBA was the conduit for the Paycheck Protection Program which helped millions of small businesses survive lockdowns and other business disruptions.  However, since 1953 the SBA has offered a variety of lending options to help banks support small businesses that otherwise might not qualify for loans.  Here are some ways SBA loans help a business obtain needed capital to grow and succeed:

Loans for All Needs:

SBA loans are very versatile in their use.  Here a few examples:

  • Buying equipment for production.
  • Acquisition of an existing business.
  • Purchase or construction of an owner-occupied building.
  • Funding improvements to a leased space.
  • Working capital for business operations.


This just names a few possible purposes and they can be combined into one loan.  You may be purchasing a business that also needs some equipment updates and maybe some working capital to meet your goals.

Lower Down Payments:

One of the main attractions to SBA financing is the ability to offer a lower down payment into the project than would be required under conventional financing.  For some purposes SBA requires at least 10% down and for others they have no minimum requirement, so it becomes the decision of your lender on what makes sense based on the need. 

Longer Terms:

SBA loans have an advantage over conventional commercial loans as they have up to a 25-year term on real estate financing available and up to 10 years on all other purposes.  This means payments can be lower than traditional financing and the loans are fully amortizing so you do not have a balloon payment at the end of the term.  SBA loans less than 15 years also do not have any penalty for early payment.


Another big advantage of SBA loans is around collateral.  Many small businesses these days fall short on collateral available simply because of the business type.  This can make finding a loan difficult from traditional sources.  Because SBA offers a guaranty on a portion of the loan to the lender, this can be a difference maker on a loan where collateral is the only thing between turning a “no” into a “yes”.

SBA loans are not for everyone or every situation, but they are very beneficial for both lenders and borrowers.  When used properly they can meet both the short-term and long-term needs of any business. 

Community First Bank of Indiana is a Preferred Lender (PLP) of the US Small Business Administration (SBA).