Small Business Administration Loans

  • SBA Cares Act Loan

    To read the latest on what the US Treasury is doing in regard to the COVID-19 response CARES Act click here.

    SBA Payment Protection Program Loans FAQ updated May 13th. Click here.

    According to the US Treasury’s web page:
    “The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses."

    Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.
    •    If you’re a borrower, more information can be found HERE
    •    The application for borrowers can be found HERE

  • Small Business Administration (SBA) Loans
    • First, let’s dispel a myth – SBA doesn’t make direct loans to entrepreneurs to start or grow a business. Instead, it provides a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders interests by promising to pay a portion of the loan back if the business owner defaults on the loan. So when a business applies for an SBA loan, it is actually applying for a commercial loan through a bank like Dacotah Bank, structured according to SBA requirements with an SBA guarantee.
    • Essentially, SBA loans alleviate the risk associated with lending money to business owners and entrepreneurs who may not qualify for traditional loans – thus opening up lending opportunities to thousands of entrepreneurs, start-ups, growing businesses, minorities and veterans.
    • What types of loans are available?
      • There are several types of loans that business can take advantage of, each developed to suit the needs of your business. The 7(a) loan program, for example, can be used for a number of purposes including working capital, revolving funds, equipment purchases, refinance existing debt and more.
      • SBA also offers export-assistance loans as well as financing for seasonal working capital (CAPLine) or major fixed-assets such as equipment of real estate (CDC/504 loans).
      • In addition, SBA can help business owners in need of financing to help with disaster recovery. Disaster loans – available to homeowners, renters, businesses of all sizes and private, nonprofit organizations – can be used to repair or replace items that have been damaged or destroyed in a declared disaster including, real estate, personal property, machinery and equipment and inventory and business assets.
      • If you are looking for smaller loan amounts (under $50,000), consider the Microloan program or the SBA Express program. A subset of the 7(a) loan program, SBA Express is designed for businesses with financing needs up to $350,000. The proceeds can be used to finance a variety of business activities and no collateral is required for loans up to $25,000.
      • It’s also worth knowing that fees on all SBA loans are currently extremely favorable to veterans and are currently set at zero for loans under $150,000.
      • For more on SBA loans, follow this link 
  • Avoid SBA Scams

    4 Ways to Spot an SBA Loan Scam

    1. Don't reveal personal financial information.
    If you receive any calls, emails, or other communications claiming to be from the Treasury Department or the SBA offering you grants or stimulus payments in exchange for personal financial information, do not respond. And whatever you do, don't provide any private information--especially not social security numbers, credit card details, or banking information.

    Scammers could use this information to apply for a loan on your behalf--and you'll be on the hook for paying it back. Also note, you only get one opportunity to apply for a loan, according to Ami Kassar, founder and CEO of MultiFunding, a small-business loan adviser based in Ambler, Pennsylvania.

    If you do receive any notices like this, the Treasury Department recommends contacting the FBI.

    2. Don't pay a cent.
    If someone or some entity says they can get you a loan faster for a fee, don't buy it. Loans under the new CARES Act are set up so that business owners will not have to pay any kind of related fees--this includes application fees, package fees, and closing fees, says Kassar.

    3. Don't work with unknown lenders. 
    While lenders don't have to be on the SBA's preferred lender's list to process these loans, they do have to apply for preferred status before granting your loan, and there's no telling how long that will take, says Kassar. 

    "It's best to go through a federally backed credit union" or traditional SBA lender, as they'll be the most familiar with the program and as such get up to speed on new processes sooner, he advises. What's better? Going through a bank with whom you already have a relationship, says Kassar. That familiarity with your company might make the lending process easier.

    4. Don't buy into fast money promises. 
    If a company or person is telling you they can get you an SBA loan under the new PPP in a matter of hours, steer clear. Lenders are still waiting on guidance for how to process these loans. The application is expected to be available starting April 3.

    If a company offers you a quick advance that's unrelated to the new PPP or any other stimulus package, you should also be leery, as you may run into rapid repayment terms at exorbitant interest rates, says Kassar.

    "If you have some hundreds or thousands of dollars a day deducted from your bank account for a quick repayment of a loan you took out, this could create a worse situation for you then you're in now," notes Kassar.

    If you do need money fast, the best thing to do, suggests Kassar, is head to your current lender and request a bridge loan, which can later be refinanced into a PPP loan. You can also apply for an Economic Injury Disaster Loan (EIDL) of $10,000 that will not need to be repaid.