The benefits of an SBA loan – Pittsburgh Business Times

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During the last recession, many small businesses struggled with cash flow and profits, making historical financials an unreliable gauge for a company’s future ability to repay debt and support its operations. After the recession, banks and borrowers began looking for financing again.

“The SBA guaranty was a good bridge to allow the small businesses to get the financing they need and for the banks to mitigate some of the risk,” said Steve Bilko, SBA credit services manager at First Commonwealth Bank.

“Basically [SBA loans] allow the banks to do deals they otherwise couldn’t do, but it doesn’t substitute for viability of the business from a cash flow or repayment perspective,” said Dave Miller, loan development officer at Enterprise Bank.

Entrepreneurs need to remain mindful of their personal household obligations and debt situations, suggested Lindsay Cost, senior SBA product specialist at Huntington Bank.

“Their new endeavor might not necessarily be able to provide them with a salary that they’ve been used to,” she said. “Thinking through how those two sets of obligations are going to be met is a helpful exercise for small business owners and also helps them to realize that they might not be able to step away from their day job as quickly as they want.”

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