Starting or expanding your business?
Look to 1st Source for the kind of help we’ve provided hundreds of businesses just like yours.
An SBA loan may be for you.
1st Source SBA Specialists are known for helping more business owners secure their loans quickly and with less hassle. As a certified Preferred Small Business Administration Lender*, we know how to navigate the application process and recommend the right option for you.
- Indiana SBA Community Lender 'Gold Level Award' recipient 2013-2019
- Named 2019 'Rural Lender of the Year' by Indiana SBA
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The SBA works by ensuring access to capital for eligible small businesses by partnering with a large network of financial institutions – including 1st Source Bank - to facilitate lending.
To obtain funding for your business through an SBA loan, you must apply with a participating financial institution . . . like 1st Source Bank.Improved Access to Credit
Many businesses face challenges in obtaining capital from time to time. Often, the guaranty that an SBA loan carries with it is enough to approve a loan that may otherwise be deemed “too risky” under conventional standards. For a conventional business loan to be approved, it must typically meet the lender’s own internal credit policies. These policies differ from lender to lender, but they generally cover such matters as:
Many lenders seek adequate collateral that could be liquidated if necessary at some point in the future.
- Industry Risk
Lenders may vary as to which industries they are more comfortable lending to based on their tolerance for risk.
- Start-up Businesses
Start-ups are generally considered to be higher risk because there’s no historical information to support their viability; the lender is basing its decision solely on projections and assumptions.
- Adequate Owner Investment or Cash Injection
Many lenders' credit policies have guidelines that require certain amounts of owner investment, which helps ensure that the owner is equally as committed to the transaction.
- Purpose of Loan
Businesses sometimes have a true cash need (such as leasehold improvements) that generally have no collateral value to a lender.
- Business Acquisitions
Lending for a business acquisition may not fit into standards set by many credit policies either. The reason differs from one acquisition to another, but generally it is related to one of the reasons already mentioned.
An SBA guaranty is often the solution to all of these concerns!
Contact Us about an SBA Loan Start Your Application
- Extended repayment terms
SBA loans offer repayment terms generally longer than a conventional business loan. That can equal lower monthly payments and more cash for your business needs!
- Interest rate caps
The SBA limits the interest rate that a lender can charge you on an SBA loan. Rate limits vary by SBA product type and loan amount, but they are generally considered very favorable. A 1st Source SBA Specialist can assist you with determining the SBA interest rate limits prior to your loan application.
- Avoid pre-payment penalties
The SBA limits pre-payment penalties and, in many cases, disallows them altogether. Conventional business loans often come with some form of pre-payment penalty. SBA loans, on the other hand, limit pre-payment penalties to the first 3 years for loans that have a maturity at 15 years or more. For SBA loans that have a maturity less than 15 years there are NO pre-payment penalties with 1st Source Bank!
- No balloon payments or demand notes
The SBA ONLY allows balloons to exist in association with working capital lines of credit, and prohibits them with any term loan utilizing an SBA guaranty. The SBA also sets standards for how troubled loans are handled, which provides some protection to the borrower.
A demand note allows the lender to issue a maturity at any time during the loan. These types of loans are generally issued for the same reasons as balloon options are issued and can have similar consequences to the borrower. A loan with an SBA guaranty prohibits demand notes, adding one more level of protection and predictability.
Contact Us about an SBA Loan Start Your Application
- Because the SBA program parameters are complex and prone to frequent change, you want a lender that can expertly navigate programs; one who can choose the best program to meet your small business needs.
- You need a banker who keeps your best interests in mind and provides you straight talk and sound advice.
- SBA preferred lenders like 1st Source Bank have a high level of experience and positive track record of facilitating the SBA’s specialized programs.
- Many lenders are required to submit SBA loans to the Small Business Administration for a second underwriting. Our status as a preferred lender allows nearly all of our loan applications to bypass that step, which translates into faster turnaround time on loan decisions. In fact, our SBA loan process typically takes no more than two business days longer than a conventional business loan.
*Approved to offer SBA loan products under SBA’s [Preferred Lender/Express; Lender/Certified; or Lender/Microloan] programs.