F&M Bank knows small businesses because we are one. As one of the Shenandoah Valley’s oldest surviving community banks, we have faced many of the same challenges that all small businesses grapple with. How to compete against bigger rivals, how to grow without sacrificing quality or service, how to keep up with rapidly changing technology. These are just some of the many common issues small business owners have to work out at every stage of running a business. Luckily, there is strength in numbers. We believe in supporting local businesses because success for one brings returns to all. F&M’s Perks@Work program, which partners with local enterprises to promote their business and offer special savings to F&M customers, is one of the ways we invest in local small businesses. We are also proud to offer small business loans to help you start or grow your company.
How do SBA loans work?
The U.S. Small Business Administration acts as a guarantor for a number of small business loan programs. You can apply for an SBA loan through an SBA lender like F&M Bank. Businesses are always risky propositions, so government backing makes it possible for small business lenders to take a chance on new and smaller companies. This crucial funding allows companies to invest in their business in a variety of ways.
Other advantages of SBA loans include a wide range of loan amounts and repayment periods, 75-85 percent guaranty, low maximum interest rates, no balloon loans or prepayment penalties, and waived guaranty fees for loans under $150,000.
Prepare for the application process by considering the following:
- What’s the minimum amount you need to borrow to accomplish your goals? Entrepreneurs love to think big, but when it comes to business startup funding, it pays to think small. If you can accomplish one of your goals, your most important or most pressing one, with a smaller loan, it may be best to start there. As you pay down your first SBA loan and cash flow increases, you can seek additional funding for the next item on your wish list.
- What’s the maximum you can afford to borrow? Calculate your monthly cash flow and divide it by your estimated monthly loan payment. Any payment lower than your monthly income is technically affordable, but you should aim for an equation that equals a figure closer to 2 than 1. Remember, you’ll have to include your monthly payment amount in a budget that already includes fixed and fluctuating expenses. Borrow conservatively to stay comfortable.
- Check your credit score. As the owner of a small business, you’re putting your own credit on the line, and SBA lenders want to see proof of a responsible credit history, especially in applications for new businesses.
- How long have you been operating? The longer you’ve already been around, the better your chances of having your SBA loan application approved. Entrepreneur loan lenders will also want to see your business’s annual revenue and average monthly bank balance.
What can small business financing be used for?
From starting to expanding your business, there are many ways to use an SBA loan. 7(a) Loans, which are the most general programs, can be used for physical purposes such as expanding or renovating your space, buying land or commercial properties, equipment and fixture purchases, inventory acquisition, and lease-hold improvements. You can also use a 7(a) loan to improve cash flow through debt refinance, a seasonal line of credit, or working capital. The Small Business Administration also offers more targeted loan programs such as SBA Veterans Advantage loans for businesses owned or controlled by veterans, active-duty military, reservists, and National Guard members as well as their spouses and widows.
Contact our SBA lending team today
Trust the future of your business to our expert lending team. Wherever you are in the Shenandoah Valley, from Harrisonburg to Staunton, you can call or visit your local branch in Augusta, Page, Rockingham, or Shenandoah county. Our friendly and experienced SBA lending team is ready to answer your questions and help you make the best choices for your company.