Small Business Administration (SBA) Loan Guide

Start a business. Grow the one you have. Comerica is a National SBA Preferred Lender. Our SBA Loan Guide provides the details you need to make the right choices for your business.

SBA Loan Qualification Guidelines
Nearly 90% of all businesses are eligible for a SBA loan program:

• More Funding for Start-Up Businesses
  Good ideas and entrepreneurial spirit drive small business. The SBA recognizes their value and qualifies you for the funding needed to start a new business venture.

• More Funding for High-Risk Businesses
  Some businesses are considered a higher risk than others. The SBA levels the playing field for owners of these businesses, and makes it possible for them to get the funding they need to grow and prosper. If your business falls into a higher-risk category, the SBA lending program can make it possible to get financing that might otherwise be unavailable to you.

• More Funding for Non-Conventional Assets
  SBA lending recognizes a broader range of assets, including non-conventional assets that would otherwise not qualify for collateralization. With SBA, you can get the funding for the parts of your business from which you know how to profit.
  

In general, to qualify for a SBA Loan, a business must be:

• Owner-operated
• For-profit
• Organized as a sole proprietorship, corporation, or professional partnership

SBA loans are available for:

• Manufacturers
• Retailers
• Seasonal businesses
• General and trade construction companies
• Agricultural firms
• Businesses that offer professional services such as doctors, dentists and veterinarians

Loan Uses and Terms
SBA loans are meant to finance the growth or creation of business, and fall into four broad categories:

• Purchase of Existing Business or Franchise
  • Businesses with a track record of success are good candidates for an SBA loan
  • Collateralization requirements are typically less stringent than for conventional loans, and often a lower down payment is required
  • Many businesses could not be sold under any other terms, making SBA lending beneficial to both buyer and seller
    

• Building Real Estate
  • For the purchase or upgrade of a business land site or house needed to operate an owner-occupied business
  • Can also be used for new construction of a business facility, such as a professional building, automotive shop, or freestanding location
  • Loan terms can range from up to 25 years
    

• Fixed Assets
  • For the purchase and use of capitalized assets (typically heavy machinery and specialized equipment) that can be used as collateral for the loan
  • Loan terms can range up to 20 years
    

• Working Capital
  • For needs like managing day-to-day cash flow, purchasing assets with short-term depreciation—computers, office equipment, or inventory loading
  • Loan terms can range up to 10 years
    

Financial Benefits of SBA Loans
Because the one thing an undercapitalized business doesn't have is excess cash, the SBA permits loans with unique financial benefits:

• Less Money Down - You can better leverage your personal or investment capital and get more done with less up-front investment—with an SBA-guaranteed loan.
• Longer Payback Terms - You can improve your cash flow with lower monthly payments, and—when appropriate—fix a better match between loan terms and longer-term rates for capitalized-equipment or real-estate depreciation.
• No Balloon Payment Required - You can establish terms that minimize your monthly payment without attaching a large payout at the end of the loan.
• Business Start-up Financing – You can start your new business in the right direction with SBA financing. Large start-up costs can be financed over long periods of time, allowing you to be more successful earlier in the life of your business.  

Credit Considerations
The SBA simply makes it easier to get the loan you want.  The general qualification standards for SBA lending are less stringent than many other types of loans, but the same issues are considered:

• Acceptable personal and business credit history
• Owner occupied business
• Past earnings and/or estimated future earnings sufficient to repay the loan on time
• Pledge of available business assets and—in some cases—personal assets to secure the loan

Loan Fees
Getting an SBA loan is, for the most part, like getting any other loan. There are, however, a few special costs unique to SBA loans. Fortunately, they are nearly 100% financeable in the package, along with other customary fees that would be out-of-pocket for any other type of loan.

The Application Process
There are five basic steps to getting an SBA loan. Except for one step the bank takes for SBA approval, the process is identical to that of any other business loan. In some cases, it may actually be simpler. At Comerica the steps are:

1. The Initial Interview
At some point, you decide that your business needs a loan and you call the Comerica SBA lending office. To reach an SBA officer nearest you, call our toll free number at 1-888-259-9786 or send us an email to SBALending@comerica.com.

Within one business day a Comerica SBA lending officer is assigned to your business and contacts you by phone. The officer assigned to your loan is chosen for his or her experience in your type of business.

Few banks have the experience and knowledge needed to make an evaluation. It's a key step, saving time and effort that could be lost with someone less experienced in SBA procedures and regulations.

2. Information Collection
Once Comerica's SBA lending officer has made an initial evaluation of your business circumstances, the information collection process begins. There are two parts to this process:

1. Collect financial and business data routine to running your business and personal affairs. Most business owners are able to put this information together by simply pulling and copying records from files.
2. Determine how the funds will work to achieve your business objectives.

This is where the "salesmanship" of the Comerica SBA loan officer can help get the funds you are seeking. An experienced officer will take the time to:

• Listen to your business objectives
• Understand how those objectives can be achieved through your loan
• Make it work by presenting your loan information to the bank and the SBA

3. SBA Loan Packaging and Submission
This is the one step unique to the SBA approval process. Once Comerica collects the information needed for internal bank approval, your loan is "packaged" and submitted for SBA approval. In many cases, Comerica is empowered to pre-approve your loan on behalf of the SBA. You get immediate assurance that your loan will close quickly and efficiently.

4. Closing the Loan
Depending on the type of loan you choose, the closing may be as simple as a visit to the bank for routine paper signing, or may involve a little more work, such as a title-company closing for a real estate loan.

No matter what it takes to get your loan done, Comerica, by virtue of its experience and SBA-Preferred Lender status, can usually get your loan processed and approved quickly.

Getting Your Loan Approved
Getting an SBA loan is relatively simple. The SBA mission is to loan you money and help you succeed. If you present them with a loan package that meets their very sensible business requirements, your loan will more than likely be approved.

*Information courtesy of Comerica Small Business Lending (www.comerica.com)

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