Why Preferred matters for your small business.
Three advantages of working with a local SBA Preferred Lender.
His business was firing on all cylinders.
So much so, the ambitious owner of an Austin-based auto repair shop had just signed a letter of intent for the lease of a second location.
One catch.
He needed to secure financing for the new building – and in short order.
Advantage 1: Streamlined Lending Decisions for Faster Funding
"Before, it might have taken around 60 or 90 days," said Glenn Lauter, SBA Department Manager/EVP at VeraBank. "He could have run into issues with the landlords and equipment vendors and dragged out the process… We literally made the loan in around 30 days, and it allowed him to get into that space and meet the timeline he needed.
"That’s the difference with SBA Preferred Lender status – the speed and approval process."*
VeraBank became a U.S. Small Business Administration (SBA) Preferred Lender in June. The SBA Preferred Lenders Program (PLP) designation gives VeraBank delegated authority to approve, process and service certain SBA-guaranteed loans.
"When you’re a Preferred Lender, you underwrite the loan and approve it internally," Lauter said. "It essentially eliminates a step, which can save on average anywhere from four to six weeks, depending on the deal."
Note: Loans that involve a change in ownership may take longer.
Advantage 2: Financing That Gives Your Business More Room
Beyond a more streamlined lending process, SBA financing itself may offer advantages over conventional financing. For the shop owner, a conventional business loan may have required him to put more equity into the deal.
"That’s usually the case," Lauter said. "But with an SBA loan, you can get longer terms and may need less equity to get it done."
Longer amortization can also be advantageous when investing in or expanding business operations.
"If you’re buying a piece of equipment, for example, a lot of times it’s on a five-year term," Lauter said. "The SBA allows us to do 10, so that significantly improves your cash flow until you grow into that new piece of equipment. A longer amortization means more manageable payments."
Advantage 3: Local Decision Makers Who Understand Your Business
Working with a local lender offers a more personal relationship with people who know your needs, the local market and what it takes to succeed in Texas. It also means working with decision-makers closer to your business.
"Bank with people you can call and talk to who understand your unique situation," Lauter said. "At VeraBank, everybody who’s helping you is sitting in Texas and knows business lending."
Local decision-making at an SBA Preferred Lender, like VeraBank, can also open up options when conventional commercial financing isn’t the right fit.
"We don’t sell our guaranteed portion of the loan," Lauter said. "It means we can be more flexible, because we’re keeping the loan in-house. For example, if you sell a piece of collateral, you’d typically use that money to pay down the loan. But if it makes sense to put that capital back into the business, we have the flexibility to do that."
An Industry-Recognized Partner You Can Trust
With more than 70 years of combined SBA lending experience, the VeraBank team can guide your business toward the right solution.
"It may not always be an SBA loan. It might be a conventional loan," Lauter said. "We’re going to do the right thing for your business and find the best product to help you succeed."
VeraBank is a privately owned community bank that serves 20 counties in East, Central and Southeast Texas with 550+ employees, a network of 42 conveniently located branches, $4.5 billion in assets, and trust assets under management of approximately $1.7 billion. Since 1930, VeraBank has remained committed to genuine banking, providing excellent personal service with the latest in banking technology. Visit us online at verabank.com. Member FDIC.
*Subject to credit approval and SBA eligibility.
This article originally appeared in the Austin Business Journal.