Getting a new business off the ground takes big ideas, hard work and proper funding. As an SBA Preferred Lender (PLP Lender), Cathay Bank works with you to find the right SBA Loan Program for your business, and secure the financial assistance needed for early growth.
Through the SBA 7(a) and SBA 504 Loan Programs, our experienced bankers can help you get the financing to buy real estate, start construction projects, make leasehold improvements, purchase equipment and inventory, acquire businesses, refinance business debt and get working capital. Discover how Cathay Bank can help set up your small business for success.
Access the capital you need with a down payment as low as 10% upon approval.
Enjoy flexible collateral requirements on all SBA Loan Programs offered by Cathay Bank.
Get a longer repayment period than conventional loans to keep more capital in your business.
Secure low fixed and variable rates throughout the life of your loan.
The U.S. Small Business Administration has worked diligently to streamline the approval process for SBA loans. Currently, SBA loans generally take the same amount of time during the underwriting process as conventional financing.
In addition, as a member of the SBA’s Preferred Lender Program (PLP), Cathay Bank can provide an even quicker turnaround for the borrower by, in most cases, obtaining SBA approval in-house.
As a federal loan program, SBA loans do require certain paperwork to be completed. However, an SBA loan application involves only slightly more paperwork than a conventional loan. If borrowers feel overwhelmed, they can work with members of the Cathay Bank SBA Department staff to complete the application forms.
The SBA only charges borrowers an SBA Guaranty fee, which is typically 2-3.5% of the guaranteed portion of the loan depending on the loan amount. While these fees tend to be higher than typical fees on conventional financing, the benefits of using an SBA program usually outweigh the cost. Additionally, these fees can be financed over the term of the loan, which is typically longer than the term for a conventional loan.
Currently, the SBA limits how much interest a lender can charge to a borrower. With an SBA loan, a borrower can be approved at fixed or floating rates. The borrower also has the benefit of lower down payments, flexible payments, shorter prepayment penalty periods on real estate loans and no balloon payments.
Borrowers can take advantage of an SBA loan to launch a start-up, expand a business, purchase owner-occupied real estate, acquire a business, refinance debt and more. The goal of the SBA is to provide assistance when a borrower’s collateral may not meet conventional lending standards. Also, while the SBA Guaranty helps overcome some financing challenges, the SBA still requires the business to show good cash flow and the individuals to have a good credit history.
Approximately 80% of businesses in the United States can be considered “small” under the SBA’s standards. In most industries, the SBA defines a “small business” either in terms of the average number of employees over the last 12 months or average annual receipts over the past three years.
The SBA uses the following industry criteria to determine eligibility as a small business:
If the small business does not meet these size standards, an alternative size standard can be considered. In this case, the company’s tangible net worth must be less than $15 million, and the average net income after federal income taxes for the last two fiscal years must be less than $5 million, in order for the business to be considered “small.”
