"As a banking officer at Community Trust Bank in Lexington servicing small businesses, Bob Ferguson is keenly aware of the need of active duty and military veterans for a loan process tailored to their unique situations.
That is why he made certain he was present in Louisville on Flag Day when the state SBA office, simultaneously with federal officials in Washington, D.C., announced the new SBA Patriot Express Loan initiative. The Patriot Express Loan is a streamlined loan program developed to encourage job creation and growth. It also is directed at helping to deter the profound impact military activation and extended deployments are having on entrepreneurs in the military community.
"I have met with vets groups around the state and there is a real need," Ferguson said. "I think this program will be utilized a lot — I have great hope for it."
The new Patriot Express Loan is offered by SBA lenders nationwide and has the fastest turnaround time for SBA loan approvals. Loans are available up to $500,000.
The loan can be used for most business purposes, including start-up, expansion, inventory, working capital or purchase of business-related real estate. The Patriot Express Loan will have SBA's lowest interest rates for business loans. Rates will be 2.25 to 4.75 percent over prime, depending upon the size and maturity of the loan.
"This program helps to honor and support our armed services vets and their families," said Linda Ritter, acting district director for the SBA in Louisville. "I am excited because it is a program that was created after carefully approaching the reality of the situation."
That reality has involved including military personnel's current spouses, as well as widowed spouses of service members or vets who died during service, as eligible for the loan program. This is the first time spouses have been eligible, Ritter said.
"For a widow who has young children to have access to this type of resource is tremendous," Ritter said. "This has never been done."
There are currently about 1.2 million men and women on active duty in the armed forces and 1.8 million in the Reserves and National Guard. Of the total, 1.5 million have been deployed to Iraq or Afghanistan since the war on terror began.
Every year, nearly 200,000 active duty personnel as well as 100,00 National Guard and Reservists are honorably discharged. This brings the total number of veterans in America today to nearly 25 million.
"Veterans are a very important part of America's small business success," said national SBA administrator Steven Preston in making the loan announcement in Washington. "When you consider that half of the nation's non-farm GDP comes from small businesses, and that small business accounts for two-thirds of new jobs, the drive and persistence of veterans are making a huge contribution to the strength of America's economy. "
Phil Danhauer, chief of the finance division for the Kentucky SBA District Office, led the Louisville group through the details of the new program.
The program builds upon other SBA loan products, but provides a higher guarantee and lower maximum interest rate, Danhauer said. It will be the most attractive loan product available through the SBA. The process for loan application has also been streamlined — a major change.
"Historically, the SBA had a reputation for being paper intensive," Danhauer said. "Under this new program, we've cleaned up the paper process."
Because it is an express loan product, borrowers will, in most cases, get an answer in a day or two. The same lenders of SBA loans will service the new Patriot Loan, which includes 2,000 financial institutions nationwide including banks, credit unions and non-bank lenders.
The Patriot Express loans are akin to the SBA Express loan, but with a maximum of $500,000, rather than $350,000, Danhauer said. The SBA Express carries a 50 percent guaranty while the new Patriot loan will carry an 85 percent guaranty for amounts up to $150,000 and a 75 percent guaranty from $150,000 to $500,000.
The Kentucky District has seen a 110 percent increase in the number of SBA loans over the past three years, according to Danhauer. To date in 2007, the SBA has seen a 24 percent increase.
SBA's aggressive promotion of the new loan program includes the advice and counseling services of resource partners at SCORE, Counselors to America's Small Business; Small Business Development Centers; and Women's Business Centers, Danhauer said.
"The SBA is proud to be aiding America's heroes," said SBA administrator Preston. "It's a privilege to be supporting these brave men and women and their spouses as they move ahead in realizing their dream of owning a business."