A robbery occurred at our Intercity State Bank Weston location earlier today. We are grateful to report that no one was injured. We want to assure all customers that their money is safe. Our Schofield and Wausau offices remain open today. Our Weston location will resume normal business hours tomorrow morning.
As a small business owner you may have heard about SBA Small Business Association) loans, but didn’t really know what they were or how they relate to your financing needs. There are many different kinds of SBA options. The SBA 504 loan program is one that can help small business owners purchase real estate, equipment, or expand their current facility with low down payment and at a fixed rate.
The SBA 504 program allows small business‘s to purchase fixed assets with a down payment of 10 to 15% (compared to a standard minimum of 20% using conventional bank financing). The program structures this type of loan the following way: The bank portion equals 50% of the project, the SBA portion equals 35-40%, and there is a 10-15% down payment required depending on the type of collateral and whether or not it is a start up business.
In addition to the lower down payment requirements, this program also offers fixed rate financing of up to 20 years for the SBA portion of the loan. As of February 2013, the rate was 4.29%.
The closing costs for the SBA 504 program are higher than traditional bank financing, so it is not appropriate for all situations. We sit down with prospective borrowers before submitting the SBA loan application to see if it makes sense to pursue. Feel free to contact me, Patrick France (715.241.0400) or my colleague Sean Strahota (715.359.4231) with any questions regarding the SBA program.
I have heard many people say that banks are just not lending anymore. Some say the rules are so constricting that very few people can actually get a loan. While the economy has created an atmosphere of cautious lending, we are in the business to lend money and we do our best to meet our customers needs without putting undue risk on our bank or on them.
When assessing the risk of any loan, we use the 5 C’s of credit as a filter for determining credit risk. The 5C’s are Character, Capacity, Collateral, Capital and Conditions.
Character is your willingness to pay the proposed debt. A large part of this is your credit history. This will show how you have handled you finances in the past. Even if you are looking at a business loan, we look at how you handle your personal finances. How you handle your own money is a large indicator of how you will handle the finances of a business.
Capacity is your ability to support the debt. For this, we are looking for documented sources of income or cash flow to make the proposed payments. We analyze past tax returns to give us an indication of whether the necessary income is actually there and if the income can be sustained.
Collateral is the ability to pay the debt through liquidation, if the projected income stream does not occur as planned. For many types of business loans, we are looking for additional personal property to be offered as collateral. Depending on what is offered as collateral, we will attach different percentages of the debt to different types of collateral. In all cases, we are looking to cover 100% of the debt with appropriate collateral.
Capital is your reserve supply of money and equity including your net worth. When in business or starting a business, there are almost always unforeseen or unexpected expenses that come up over the course of time. Having the ability to cover some or most of these is essential. Adequate capital can also carry you through slower cycles of your business.
Conditions are the general business conditions that exist in your market place. Is there room enough in the economy for your business? Do you offer a special niche that is yet to be filled, or are you one of many companies doing the same thing? Since the economy is not very strong right now, you will have to show more strength in the 4 other areas (character, capacity, collateral and capital) to overcome the weakness of the current market place.
Even in the midst of our current economic climate there are loan opportunities for those who are prepared and can show strength in these 5 important areas. If you are planning a business expansion or a start-up rate yourself in these 5 areas before applying for your loan. Or, if you’d like to talk through your eligibility with one of our friendly loan officers, we’d welcome the conversation. Contact us through our website or give us a call at: 715.359.4231.
All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation (FDIC) from December 31, 2010 through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.
The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It also includes Interest on Lawyers Trust Accounts (“IOLTAs”). It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, and money-market deposit accounts.
For more information about temporary FDIC insurance coverage of transaction accounts, visit www.FDIC.gov.