The Situation: Business Owner Needs To Refinance
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.
- Industry Bias
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 Bank is more comfortable extending SBA loans within an industry traditional lenders consider risky.
- Reduces Monthly Loan Payment
The First Business Bank 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.”