By Molly Cataldo

Special to the Herald Review

There’s no doubt that owning a business in today’s economic climate, especially a small business, isn’t easy. Although we’ve been relatively fortunate compared to other parts of the country, our local business community has still faced its share of economic challenges. Many businesses have cut costs and sometimes personnel to make it through this economic down cycle. Others, who had hoped to buy a business, decided to hold off on the purchase.

The good news is there are signs the economy is improving. With that news, small business owners and entrepreneurs might want to consider taking advantage of U.S. Small Business Administration (SBA) loans.

These loans were specifically created to assist and protect existing small businesses and to start, build and grow a business. That means these loans can be used to purchase an existing business; purchase land, a building, or equipment; provide permanent working capital; or assist with an expansion. SBA loans are also available to help small businesses that export to foreign countries, to businesses that operate in rural areas as they have unique loan processing needs and to those who are active duty military personnel.

Why consider an SBA loan? The following are qualities that make SBA loans so attractive:

There is usually a lower cash down payment requirement, as little as 10 percent instead of the typical 20 percent to 25 percent down payment.

SBA loans have a longer repayment schedule providing lower monthly loan payments compared to conventional terms.

There are no balloon payments meaning the loan won’t mature and the balance won’t come due in three to five years as do conventional loans.

Recent changes in SBA’s CAPLine allow for businesses to secure a SBA backed line of credit using account receivables as collateral. This is beneficial to small businesses that land a large contract for work and need funds to beef up inventory or hire new staff as a result.

Despite the benefits and incentives that SBA loans offer, many still are under the misconception that banks aren’t lending. This is simply not the case. Small businesses are the backbone of both our local and national economy and, in the last few months alone, the SBA supported $14 billion in lending.

Another clarification is the term “small business” goes above and beyond one or two employee firms, so it’s important to not rule yourself out for being eligible for an SBA loan. And, as a result of permanent SBA regulation increases, more businesses may be eligible than in the past. In addition, limits for certain SBA loans have increased permanently from $2 million to $5 million.

If you’re looking to establish lines of credit, need financing assistance now or in the near future, or want to learn what types of supporting documents are needed to see if you qualify for an SBA loan, take time to meet with a financial representative at a bank that has experience helping businesses in the community with SBA loans. For an added convenience, seek out an SBA-preferred lender for a smoother, easier and quicker loan process.

Remember, just because the economy isn’t where it once was, it doesn’t mean funds aren’t available. Now is a great time to explore your options and position your business for growth.

Molly Cataldo is branch manager and assistant vice president with Citizens Bank of Evart.