Farming and agriculture in the Ozarks plays a vital part of our local economy and is a unique industry full of its own rewards and challenges. As someone who works closely with our farming community, I feel that I can share some good information on types of lending available to small businesses in the area so we can continue working together to remain a viable and thriving community.
The U.S. Small Business Administration classifies small businesses as those independent businesses that have less than 500 employees. Small businesses represent 99.7 percent of all employer firms in the United States and are responsible for employing just over half of all private sector employees. In fact, small businesses have generated 64 percent of net new jobs over the past 15 years in our country. All this to say that the success of small businesses is of vital importance to our local and national economy.
Commercial banks and other depository institutions are the largest lenders of debt capital to small businesses, and many of those loans are made through the Small Business Administration (SBA) Guaranteed Loan Programs. The SBA itself does not make these loans, but rather guarantees them through partnerships with private banks. The benefit of this type of loan for a business owner is that longer borrowing terms are an option, allowing more time for repayment. Also, the payments are typically lower, keeping the majority of your cash flow within your day-to-day operations instead of being bogged down with payments for necessary equipment or resources.
There is no minimum amount for an SBA loan, but a maximum is set at $2 million. Many of my neighbors here in Northwest Arkansas deal with a unique set of financial circumstances each year given the seasonal nature of our industry. Fortunately, seasonal repayment plans are available as an option for an SBA loan. This provides your bank the opportunity to work with your repayment schedule, allowing higher payments when cash flow peaks and lower payments when it dips in the winter months.
At Arvest, we offer SBA Guaranteed Loans as an option to our business customers. We know first hand how important it is that you get the equipment or resources you need to make your business successful. Sometimes these needs arise when credit is hard to come by too, but don’t let that scare you. SBA loans operate within a unique framework designed to help our small businesses succeed.
If an SBA loan sounds like a good option for your business and you want to learn more, stop by one of our branches or visit your local lender.
Dax Moreton is a commercial loan officer at Arvest Bank, in Prairie Grove, Ark.
