Honored In Small Business Business
The award relates to 146 SBA loans National City wrote in 2001, based on total SBA figures for type 7 (a) and 504 loans combined.
“We look at those numbers as something to be proud of,” said Geoffrey Maguire, small business banking officer for National City in Grand Rapids.
“And not only do these numbers put us top in the six-state template that we cover, but it also puts us ahead in the nation.”
Designated a preferred lender under the SBA programs, National City looks for clients that are trying to start a new business or grow a small business. To achieve this the government has appropriated funds enabling the SBA to provide guarantees to financial institutions, like National City, to work with small businesses that they might not have been able to fund conventionally.
In most cases, Maguire said, small businesses aren’t able to secure funds because of a collateral shortfall.
“These are businesses that have a need for capital and a lack of collateral,” he said. “And depending on their specific needs, we will set them up with the proper type of SBA program and in turn that will determine what kind of guarantees we will receive.”
He said the bank usually uses one of three types of SBA programs: the 7(a) Loan Guarantee Program, SBALowDoc and SBAEXPRESS.
Maguire said the SBA 7(a) Loan Guarantee Program is ideal for start-up companies as well as more established small businesses. The SBA will guarantee up to $1 million per borrower, although the loan itself can be up to $2 million.
Because SBA 7(a) loans are partially guaranteed by SBA, he said qualifying criteria and terms are generally more flexible than for conventional bank loans. Loan proceeds may be used to provide working capital, purchase machinery, equipment, fixtures and leasehold improvements, purchase or construct a building, or expand or renovate existing facilities.
Available terms depend on the purpose of the loan. For example, term loans may be up to five to 10 years for working capital, and up to 25 years for fixed assets such as equipment or real estate — though the loan’s term may not exceed the useful life of the asset it finances.
“The SBA will usually come to bat for most things, as long as we aren’t refinancing anything with an existing debt,” said Maguire. “And sometimes even in such a case, as long as we are putting the client in a better payment light. Everything is determined by the specific needs of the client and we will get as specialized as we need to.”
There are also special programs under the SBA 7(a) program.
When it’s important to keep the paperwork to a minimum, SBALowDoc streamlines the loan approval process.
For loan requests up to $150,000, the client completes the front side of the SBA’s one-page application and National City completes the opposite side.
He said the process is simple and SBA generally can respond within 36 hours and will guarantee up to 85 percent of the loan amount for the financial institution.
When speed is of high importance, SBAEXPRESS could be the answer, because National City’s own application forms and approval process are used for loans up to $150,000.
Under this program, the maximum SBA guarantee is 50 percent for the financial institution.
Revolving lines of credit and term loans are also available under this program.
“These are all good programs and, like I said, it really depends on the needs of the client,” Maguire noted.
“We welcome all viable small businesses and I think it is really our team of SBA experts and our Small Business Banking division that has really led us to the head of the pack and will keep us there over the years.”