Ready to grow your business? First Financial Bank provides SBA expansion loans, including loans with 0% down.
You may have used a Small Business Administration (SBA) loan to buy or build your initial small business. Did you know that the SBA also provides business expansion loans that don’t require a down payment? Unfortunately, many business owners haven’t heard about this opportunity. Those who have may have found the description of the rules and guidelines on the SBA’s site just too complicated.
We make it much more straightforward. As a Preferred Lender, First Financial Bank handles your loan process from end-to-end.
How does this work? We discussed the value of expansion and leveraging these loans with Dr. Bobby Glaze, loan officer, pharmacist, and owner of an independent pharmacy. Here are some of the things you should know about loan eligibility, how this process works, and what to expect along the way.
Loan eligibility
These specific SBA loans are available to small business owners who are looking to expand their business. For example, open a second location. However, they must meet specific criteria to be eligible.
- They must have the same ownership structure for the existing and new businesses. So, if they have a partnership for the current business, the same partnership must be owners for the new location.
- The new business must have the same NAICS code as the existing business. “In other words, if I were applying to buy another independent pharmacy, that would fall in the same code. But if I were looking to diversify by buying a pet toy company, it definitely wouldn’t,” says Bobby Glaze.
- The new business must be within a reasonable regional area of the current one. Typically, we are looking at driving distance within one day as “reasonable”. In other words, a small enough distance to exercise daily control over both locations.
How does this process work with First Financial Bank?
With us, it’s all about the relationship and helping you navigate the process smoothly. Thanks to our experience and expertise, the SBA has provided First Financial Bank with the Preferred Lender status. This means we are entrusted to review, assess, and underwrite the loan without having to wait for government approval. Ultimately, you are provided with personalized attention and a streamlined process:
- You work with the same person throughout the process. With a single point of contact, you will always know who you can reach out to for information and answers.
- Our team members are industry experts in addition to banking.Their backgrounds include experience in independent pharmacies, pet care businesses, veterinary practices, linehaul – and more. Their deep industry knowledge allows us to better understand our clients’ needs and better support your successes.
- We work with you to pre-review your documents. We provide you with any feedback on items that may need more details or clarification before your application gets to the actual loan committee.
Some of the specific elements you’ll need to provide for review:
- Three years of tax returns
- A P&L and balance sheet from within the last 120 days
- Information about your current business finances and your personal finances, and if you have partners, we’ll need to see theirs, too.
The value in this type of expansion – and this type of loan
Since the focus is on growing the same type of business that you have now with the same ownership structure, you are able to use your current knowledge and experience to drive success. Potentially:
- Leveraging your current supplier and vendor relationships to negotiate better terms.
- Take advantage of the skills and knowledge of your team members at each location to work together if the distance between the locations is minimal and your team members are amenable.
- Achieving economies of scale by using your existing systems, tools, and technology at the new location, too. In the long run, this can save a lot of time in both training and maintenance.
Also, check out this article for some additional ideas.
Along with the loan process, this specific type of loan allows you to expand your business much more quickly. With no down payment required, you can retain that cash to run your business – both at the current location and the new one. We can review your work at your current location, which will enable us to better evaluate your potential achievements for the new business.
