Access to capital can make a huge difference for a business’s long-term viability, as can the right business banking relationship. While most banks across the country offer traditional loans to businesses, SBA-guaranteed small business loans typically only constitute a small portion of an institution’s lending portfolio. For many banks, these types of loans simply aren’t a strong priority, with over 50% of small business loans sold on the secondary market.
“At Wintrust, we’re a relationship bank,” explains Thomas Huffman, President, Wintrust SBA Lending. “We’re continually asking ourselves how we can help our customers succeed—how we can continue to grow with a company.”
Having a strong relationship with your banker means you are not starting from scratch when your business needs change or an opportunity presents itself.
“When you need additional funding, we’ve got the foundation in place to respond quickly to your business opportunity,” Huffman says.
With a team dedicated to small businesses, comprising both business advisors and SBA specialists, clients have seasoned professionals originating their loans and a banker who takes the time to get to know them and their business. “We get things done in a different way with customer service that people don’t find elsewhere,” Huffman says. “We make the process customizable. Finding the right loan means we keep tweaking until everyone is happy with the result.”
Breaking down SBA loan options
Loans backed by the Small Business Administration (SBA), a government agency, can help businesses shift into new markets, invest in new product offerings, fund real estate expansion, or refinance high-interest debt. Essentially, these types of loans make it easier for business owners to receive funding by reducing lender risk. While the lending institution processes the loan, the SBA guarantees a percentage of the loan for the lender, reducing the risk. There are different types of SBA loans, all with various stipulations and requirements.
SBA Express Loan1 (up to $500,000)
With faster turnaround times, SBA Express Loans are a great option for companies needing to borrow under $500,000. These types of loans are often used to assist with expansions, acquisitions, and cash-flow management.
“If we can do express, we’re going to do it express,” Huffman says. “Nobody likes paperwork so we avoid it whenever we can.”
SBA 7(a)2 Loan (up to $5 million)
Longer amortization of capital expenditures offers businesses a wide range of opportunities, including expansion, acquisition, buying a business or equipment, helping to improve cash flow, or buying out a partner. Loan amounts can exceed traditional bank loans, with options to finance fees.
And with recent policy changes from the U.S. Small Business Administration, eligible borrowers can now combine 7(a) and 504 loans—increasing cumulative financing limits to $10 million and allowing for further flexibility to pair long-term SBA-backed financing for real estate and equipment with working capital.
SBA 7(a)2 Working Capital Pilot Program (up to $5 million)
The Working Capital Pilot Program (WCP) is tailored for the flexibility of operational cash flow. WCP serves as a short-term bridge to a conventional loan for clients seeking a transitional line of credit who may be recovering from a challenging year. There are two types of credit available: transaction-based and asset-based lines of credit.
“It’s ideal for that young business that’s growing, but that has more balance sheet leverage than a traditional bank might want to see,” Huffman says. “Or it’s that business that has to carry a lot of inventory. Those are two types of business that fall squarely into the target market for this program.”
SBA 5043 Loan (up to $10 million)
Offering longer terms, these loans are often used for businesses that need new equipment or a larger space. Benefits include lower down payments (as low as 10%) and fixed-rate financing on a portion of debt. These types of loans are typically used to assist with acquisitions, refinancing equipment, or owner-occupied real estate.
Huffman mentions SBA 504 Loans can be under-utilized, as they take a little more time and effort, with a real estate component and the need for appraisals, but can be a great option in certain instances.
Wintrust finds the right options
Taking the time to understand your business and its unique needs, your advisor will help you decipher what’s best for your situation. “We try to be product-agnostic, recommending the product for the best use-case,” Huffman says. “We build relationships. We’re not just transactional. We always want to see your business through all its stages.”
See what Wintrust can do for your business—connect with a banker today.
