SBA Financing: Flexibility to Meet Your Business Goals

SBA loans are a high-profile financing tool that is sometimes misunderstood. With a more streamlined application process than in the past and relatively long repayment terms and low down payments, SBA loans can be attractive even to business owners who qualify for conventional financing.


Citizens Financial Group’s Gary Heidel, Senior Vice President and SBA Senior Credit Product Manager, and Kevin Ferryman, Senior Vice President and Director of SBA Lending, discuss the advantages of SBA financing and dispel some key misperceptions.

What are some of the key needs that SBA financing can help businesses meet?

Heidel: SBA loans can be used to purchase equipment, buy real estate, access working capital, and make leasehold or building improvements. They can also be helpful in facilitating transfers of ownership since there are risks involved in these transactions that may not be accounted for in a bank’s standard credit policy. SBA loans can also help banks work around shortfalls in collateral since they allow us to finance client lists, goodwill, and other intangibles.

What are a few of the key advantages that SBA financing offers over conventional loans?

Ferryman: SBA financing allows banks to offer a more flexible loan structure. It offers longer terms and lower payments, which can strengthen cash flow and allow borrowers to keep more of their money in their businesses. It requires as little as 10% of a borrower’s own equity, whereas a conventional loan would require more. Since it is supported by the government, SBA financing also enables businesses to borrow more than they would be able to with a conventional loan. An SBA loan can also be used to meet multiple needs, which isn’t the case with conventional financing. For example, a borrower can use a single SBA loan to acquire a business, purchase equipment, and strengthen working capital.

What are a few common misperceptions about SBA loans?

Ferryman: One is that SBA loans are only for businesses that aren’t doing well financially. That’s not true. Business owners who qualify for a conventional loan may prefer the longer terms and lower payments that an SBA loan offers, particularly if they have other projects on the horizon and need to conserve cash. There is also the misperception that SBA loans take a long time and involve a lot of paperwork. There is more to the SBA process; however, banks that know the process well, such as Citizens Bank, a SBA Preferred Lender, can minimize the time and impact on the client.

Describe a specific example of how SBA financing helped a business owner reach his or her goals.

Heidel: We are working with a furniture company with 22 locations whose owner wants to pass the business on to his employees. We’ve been able to finance three locations so far, allowing the managers of those locations to buy them and realize their dreams. The managers are benefiting from the sweat equity they’ve invested over the years, while the business owner is realizing his goal of transitioning out of the business in an orderly fashion. This is just one instance in which we’ve been able to help business owners reach their objectives through SBA financing.

What qualifications are important to look for in an SBA lender?

Ferryman: It’s important that a lender have experience with, and deep knowledge of, the SBA lending process. Ideally, the lender will have a dedicated SBA team, resources in place, and the designation from the SBA as a ‘Preferred Lender,’ meaning the authority to make lending decisions on behalf of the SBA. Citizens Bank possesses all of these key components. With this level of commitment, Citizens is able to reduce the time it takes to apply, process, and close loans, which enhances the overall customer experience.

More information

We are committed to helping your business succeed. Our dedicated business banking professionals can help you find the right product to meet your business’ needs. To learn more, please call 1-800-428-7463, visit us online, or visit your nearest Citizens Bank Branch.