The SBA loan program was started in 1953 as a way for the U.S. government to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns” through loans, loan guarantees, contracts, counseling sessions and other forms of assistance. What makes SBA loans so attractive to businesses is that the down payment is only 10 percent of the total, and lenders work with the SBA to cover the remainder so that the risk is shared.
Although there is a rigorous process to gain approval, the goal is to provide worthy businesses with funding in order to expand.
SBA loans have been on the rise in recent years, when lenders have been more hesitant to guarantee larger loans. The Small Business Jobs Act signed into law in September 2010 increased the maximum SBA loan amount from $2 million to $5 million.
Robby Fox’s business was built with hard work and SBA loans.
Fox, who owns Advance Industrial Group Inc. with his brother Chris Fox, applied for an SBA loan in 2007 through Queensborough National Bank & Trust that allowed them to grow the business to nearly 17 times its size by 2011.
“The only way we were able to do this was through the SBA loan program,” Robby Fox said. “That 10 percent down payment made all the difference in the world.”
The Fox brothers used the loan to move from working in a 6,000-square-foot barn to a 60,000-square-foot headquarters that now employs around 70 people. They are getting plenty of contracts to manufacture conveyors and other custom design machinery for John Deere and the area paper mills, and they aren’t having any trouble making payments on the SBA loan.
“We’ll vouch for that,” said Bill Thompson, the executive vice president with Queensborough National Bank & Trust.
Thompson said the SBA program is one of the most effective ways to help small businesses, who in turn create jobs and pump up the local economy.
“It’s tried and tested, and it’s a good investment for the taxpayer,” Thompson said.
Scott Duplantis and his wife, Anne, used an SBA loan to purchase Lazy Life Seats & Covers LLC in August. The Augusta company does after-market upholstery and exterior work on golf carts.
He said he was so sure the SBA program was what he needed that didn’t even try any other kind of loan.
“I didn’t even think about non-SBA loans,” he said. “These days, loans are tougher to get, and I knew I wouldn’t find something better.”
In the short time that Duplantis has had the company, he has already created two part-time positions and plans to expand more as things get settled. Through Wells Fargo, he was able to get a fixed interest rate on the loan that keeps him from any financial surprises.
“We’ve been busy, and we’re focused on growing,” he said. “It wouldn’t have happened without the SBA loan.”