The owner of a gas station/convenience store needs to refinance a loan with a large balloon payment. Margins on gas typically are low, and external factors, like road construction, can dramatically impact the business’s cash flow, so it’s considered risky. On top of that, gas tanks present environmental concerns that drive away some lenders.
Lenders simply can’t understand the complex nuances of all industries, and may choose to stay away from supporting businesses within it.
THE SOLUTION: SPECIALTY FINANCE SBA LOAN
First Business Bank offers a complete toolbox of funding solutions to meet business owners’ unique needs. For this situation, an SBA loan is a perfect fit. Guaranteed by the U.S. Small Business Administration, SBA loans are an alternative to traditional bank loans, designed to help people starting up or growing a business who may not meet traditional lending standards.
Removes Industry Concern
The U.S. Small Business Administration typically guarantees 75% of SBA loans so First Business is more comfortable extending SBA loans within an industry traditional lenders consider risky.
Reduces Monthly Loan Payment
The First Business SBA loan reduces this business owner’s monthly loan payment by 23%. The long, 25-year amortization reduces the monthly payment from $7,500 to $5,714, amounting to $21,000 savings annually.
Special Purpose Real Estate
This loan includes property designated by the SBA as Special Purpose Real Estate, defined as “a property that is appropriate for one use or limited use: a building that cannot be converted to another use without a large capital investment.”
"Our $820,000 SBA loan features a 25-year amortization, so now our client has a consistent loan payment over the next 25 years. Conventional loans often include a balloon payment, which causes borrowers to refinance every few years, and risk rejection. This SBA loan is fully paid over 25 years with no balloon, so our client doesn’t have to worry about refinancing every five years. More importantly, the new loan improved cash flow by $21,000 per year.