Not Just Another Bureaucracy: The Small Business Administration's loan guarantee program is a lot more proactive than you might think

New Mexico Business Journal, Dec, 2001 by Susan Craig

Some banks specialize in specific types of loans. Sunrise Bank, for example, focuses primarily on real estate lending. "Right now we're seeing a lot of office condominiums being built," says Brenson. "We work with developers, helping them put their packages together. Customers can get loans for real estate for as little as 10 percent down with a 25-year payment term." Sunrise also facilitates SBA lending for the purchase or acquisition of businesses. The majority of the startups they do are franchises. "SBA loans are treated almost exactly like conventional loans," Brenson adds. "There are no fewer credit requirements, but you get longer terms and better payment plans."

Wells Fargo, the top bank SBA lender in New Mexico, concentrates on acquisitions, startups and expansions and does a lot of real estate lending. Citizens Bank in Las Cruces is able to offer reduced fees to loan applicants through the Community Adjustment and Investment Program (CAIP), an SBA partnership program. Citizens is seeing requests for loans to refinance existing debt, which is obtainable as long as the loan helps cash flow by 20 percent. Western Commerce Bank, says Pace, likes lending to manufacturing companies, creating employment opportunities in the Carlsbad area.

Is It for Me?

So does your business qualify for an SBA loan? SBA's Cadena states that 98 percent of New Mexico businesses qualify as to size. The definition of a 'small business' is based on the average number of employees during the preceding 12 months or on sales averages over the previous three years, in seven business categories. Ineligible are nonprofit organizations, lending institutions, religious organizations, gambling establishments and floor plan financing (car dealerships).

Applicants must be considered under the same guidelines as with a conventional bank loan. In your business plan, your lender will look for 'the six C's:' character, commitment (personal investment), creditworthiness (credit history), collateral, capacity (management ability and dependability) and clarity (of purpose and plan).

An excellent resource for information on all of the SBA lending programs is a booklet published by the SBA entitled "The SBA 2001 New Mexico Small Business Resource Guide for Starting and Expanding Businesses", available at the SBA New Mexico District Office, 625 Silver S.W., Suite 320, Albuquerque 87102, telephone (505) 346-7909; or at SBA lending institutions.

SUSAN GRAIG IS A'FREELANCE WRITER BASED IN ALBUQUERQUE AND A FREQUENT CONTRIBUTOR TO THE NEW MEXICO BUSINESS JOURNAL.