The SBA has completed more than $423M in Chicago-area loans since October, which has spurred a boom in owner-occupied real estate deals, First Eagle Bank commercial lending VP Gene Khalimsky tells us. Big banks are still restructuring and less welcoming to startups and small businesses, and SBA has been a boon for riskier product types, like franchises or hospitality, he says. The top programs include 504 fixed-rate loans (used for construction or acquisition of a 51% owner-occupied property) and 7(a) floating-rate loans (available for refis and better for short-term holds of owner-occupied real estate).
Putting as little as 10% down on real estate is critical for cash-strapped startups, Gene says. In addition to an established daycare that’s looking to open a new location with SBA funding, First Eagle has also seen borrowers ranging from auto repair to dental offices. (Average loan size ranges from $500k to $2M—depending on how regularly you floss.) The challenge with new businesses is educating the borrower on creating a unique business plan and forecasting data the SBA looks for, Gene tells us. A big-time boater, he’s planning on spending as many weekends as he can this summer on the water in New Buffalo, Mich.
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