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Janice France-Pettit: A primer for small business loans in 2010

Union Bank

Posted: January 22, 2010 8:50 p.m.
Updated: January 23, 2010 4:55 a.m.
 
In today’s challenging economic environment, small business loans may seem harder to come by. During 2009, much emphasis was placed on programs encouraging banks to increase access to credit for businesses to help support a speedy economic recovery.

With all the changes, it’s important to keep up on the latest developments. If you have a relationship with your banker, ask him or her to help you stay informed about the changes, and learn about how they may benefit you and your business.

Following is a brief summary of some of 2010’s small business loan basics.

General loan features

Many banks offer a variety of small business loan programs, so business owners should shop all options to find the loan best-suited to their needs.

You can select repayment terms such as a single payment or term loan and opt for either a secured or unsecured loan. Repayment terms may allow you up to 60 months to repay your loan. For vehicle loans, you can secure a loan for up to 84 months.

Property loans are generally up to 25 years.  

Some banks, including Union Bank, also offer professional loan packages with streamlined applications for licensed professionals such as attorneys, physicians and certified public accountants, making it easier to apply for a loan.

There are also financing programs specifically designed for businesses owned by minorities, women and service-disabled veterans.

Lines of credit allowing small businesses immediate cash for short-term working capital, seasonal purchases, inventory, etc., are also an option you may wish to consider.

With a line of credit, you may write a check or transfer funds online to cover your expenses without depleting your cash.

Additionally, some banks offer programs to convert some or all of your outstanding credit line balance to a fixed-rate, fixed-term loan, giving you more flexibility.

At Union Bank, this is called a business options line. Your banker will explain the terms and fees associated with this type of loan.

Government help
The Small Business Administration is an independent agency of the federal government designed to assist small businesses. While the agency does not loan money directly, it works with local banks to provide small-business financing.

In response to last year’s credit crisis and concerns that small businesses could not get loans, the government established a fund to temporarily eliminate SBA loan fees and increased government guarantees in 2010 for business loans.

You may wish to visit the Small Businesses Administration’s Web site at www.sba.gov to learn more.

The SBA offers several loan options. The 7(a) program allows small-businesses owners to apply for up to $750,000 for working capital, asset purchase and leasehold improvements.

The 504 loan program is intended to provide funds for asset purchases, such as land or equipment.
Some banks, including Union Bank, have preferred lender status with the SBA, which streamlines the application process.

There are other loan programs through government and non-government agencies that specialize in lending to small businesses with special lending needs.

The California Capital Access Program (Cal CAP) offers financing for working capital, real estate or equipment purchases, tenant improvements or business acquisitions and is only for businesses located in California with 100 or fewer employees.

Even in this economic climate banks are still lending. Since changes are happening quickly, cultivate a relationship with your banker and research the various options to stay informed.

The foregoing article is intended to provide general information about creating a trust and is not considered legal, financial or tax advice from Union Bank. Trusts, wills, foundations and wealth planning strategies have legal, tax accounting and other implications.

Please consult a legal or tax adviser. Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions. Her column reflects her own opinion and not necessarily that of The Signal.

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