Dr Bob Underwood (Host): Small business administration loans play a pivotal role in fostering small business growth. They provide crucial financial support to entrepreneurs who may face challenges obtaining traditional loans and often come with favorable terms, such as lower interest rates and longer repayment periods, easing the financial burden on small businesses.

This is Talking Cents, a podcast from Heritage Federal Credit Union. Today, we are joined by Cam Davenport, a lending financial services consultant with Heritage, to unravel the nuances of small business administration, or SBA, loans. We'll uncover the benefits, discuss the application process, and explore what makes Heritage Federal Credit Union stand out in the realm of SBA lending.

Welcome to Talking Cents. I'm your host, Dr. Bob Underwood. Camden, welcome. How are you today?

Camden Davenport: I'm good. Thanks for asking. I appreciate you having me on here today.

Host: Yeah, absolutely. So, how does SBA financing benefit me as a small business owner or someone looking to start a small business? Can we explore this in the ins and outs of SBA financing, considering both the financial and the strategic viewpoints?

Camden Davenport: Absolutely. So to paraphrase our director, Tiffany, to start, I mean, she really said it best. So, potential applicants or potential small business owners, they really just have kind of a dream they're looking to live. They have something they love doing and they want to turn it into something that they can do for a living and give back to their community. So, they don't really know a whole lot about SBA and that's understandable. We use the example of Annie. Annie, she loves to bake cookies and she wants to open up her own bakery. She comes to us and is like, "I don't really know where to start. Could you help me?" So, that's really for us to take the burden off of them, consult with them, and guide them through that process.

For a lot of businesses who are just starting off, SBA really allows a great flexibility in getting started, so with flexibility financially compared to traditional lending. Let's say we have a business that is pretty well-established. They'll come to us, they'll have what they need as far as, you know, the basics, tax returns, things like that. They may go traditional financing and the biggest thing in that is going to be a 20/80 split. So, 80% will be on us as the credit union, 20% will be on the individual looking to apply. With SBA and not necessarily having an established business, applicants can utilize that for greater flexibility in the fact that not only are we splitting between us two, but now we have SBA. That'll benefit the applicant by now only taking in 10% of the deal.

So, as far as strategically, the biggest thing I would cover there is the fact that they can go, especially in our local community, Owensboro, Evansville, and that surrounding area. I think a lot of individuals prefer to work with a local bank or local credit union that they can have and build a relationship with. So, I think the same can be said for potential business owners. They want to be able to go to them, work with them to get a business loan. But now, they can come to us and take advantage of SBA as well.

Host: Yeah, I love the way you kind of started. It's almost like making people's dreams come true as they have this idea for a small business, something that they really love and the way this assists in that process and giving back to the community, which we'll talk about here in a little bit.

So, you mentioned the application process. Now, how would someone interested in getting a small business loan apply for one, especially in this day and age where we have everything online? Everything's an online transaction.

Camden Davenport: If I were to start with traditionally, a lot of applicants will take advantage of what is called a Lender Match. Basically, you would go on as the applicant, fill out your business information, contact information, stuff of that sort, and submit that through to Lender Match. At that point, all of that information is going to get sent out to lenders, possibly all over the country. And then, at that point, you're receiving phone calls, emails from all these institutions, and they're going to try and get you to finance with them.

Now, what Heritage has implemented here is to basically offer to, in a way, eliminate the need to go to Lender Match, especially for our local market. We can go online to our website. We have an online portal that deals in our SBA loan applications. So if you were wanting to work with us directly, you could go online, fill out the application. It's pretty easy as far as walking through to fill out the information. If you were in a position where you had documentation that it was asking for, you could upload it there. And basically, someone like myself or someone else on our team would be reaching out at that point.

If I could just quickly also mention in that process, initially if you were just wanting to fill out an application, talk with someone about the process, any questions, concerns you may have about it, that is perfectly fine to do that, and there is no credit pool in that initial process. I know that's kind of a point of concern for a lot of applicants. They don't want to necessarily get to involved in something that maybe they don't know a whole lot about or want to learn more about first before starting a process. That is something that we just launched, as far as being able to go online and apply directly. That way, you're not getting bombarded with a lot of different institutions.

Host: So, that's one of the ways that Heritage really stands out from other SBA lenders, it sounds like.

Camden Davenport: Correct. Also, on that point, not only are you able to apply directly with us and take out the need to go through Lender Match, but also there's a comparison in, let's say, we had an applicant go through Lender Match and they applied with a bank that is out of New York, and they go through that process and they get funded well a lot of times, not all the time, but a lot of times that'll work out to basically where a third party will also get involved to service your loan.

Now, if you want to think about that as similar to like student loans, I apply for student loans and I get the funding for that. But in the time that me personally, I've been paying mine back, I think we've changed services like three times. So, it can kind of be a little bit of a headache as far as that goes With Heritage, we do all of this in-house. From the moment that you're reaching out possibly applying directly to doing your loan application process, getting funded. And then afterwards, where you're making payments on your loan, that's all taken care of with us. So, it's almost if you're going to start with us, you're going to stay with us through to the end.

Host: Yeah. And that is phenomenal. It really makes it a personal touch in terms of working with your financial institution. I know I've been through that either with mortgages and you use student loans. I'm a physician, so I've had a few of those. And so, yeah, I know what it's like to have it kind of transfer around. So, that's phenomenal.

What are some of the other benefits of having the process handled locally? You kind of pointed out that there's the Lender Match. So, I'm guessing that's really just not a common practice. And what are some of the other advantages that it offers? I know that Heritage really spends a lot of time focusing on their community engagement. That is part of the mission of Heritage. So, help us understand what are some of the great advantages this offers if I'm searching for SBA financing.

Camden Davenport: When I'm thinking about a small business, there's almost a level of intimacy in that to me. So, what are small businesses really? These are individuals who have taken on really a great level of responsibility to get involved in the community themselves, provide a good or service, and really help provide a sustainability to the community as well. And the fact that they're spending a lot of time, you know, running their small business, being active in the community themselves, it's almost like we want to be able to provide that level of intimacy back to the business owners in their journey to SBA or traditional financing, whatever it may be.

By implementing the lack of needing to go out to Lender Match and be able to come to us directly, call us first if they need to go over questions, things like that, from there, they can apply with us directly, they can do all their process in-house. We're local to them. If there's any concerns, questions that pop up, it's almost like I would feel better knowing that the bank that's handling my business' financing is also local in the community, not in, like I said earlier, New York, and then the service is somewhere else. We want to make sure that we're taking that burden off of their shoulders and being able to assist them in the journey of getting financing for their upcoming project or if they're looking to buy a building, whatever it may be, we can be there so that that's one less concern that they have to worry about considering they have all of this other stuff they're helping do in our community.

Host: Yeah, absolutely. And the word that comes to mind, it's almost like a partnership that I've got somebody that I can count on as I'm trying to go through this process with my new business. So, can you share some real world examples? You know, some stories of small businesses that have successfully utilized an SBA loan from Heritage?

Camden Davenport: Absolutely. The first one that comes to mind is actually a good one for a different few reasons or a couple of reasons. One, because this was a business that was already pretty well established, this wasn't a startup like a lot of applicants who are looking at doing SBA are. I won't get into any names of course or anything like that, but this specific business was in a market that had recently slowed down quite a bit.

On top of that, we were getting into these colder months, which was a slow time for this market as well. So, not 100% sure just off the top of my head what the initial request was. I believe it was just for working capital to help them get through the season. But they had applied for a large amount for the working capital. We were able to take a look at everything. And I think they had three payments that we also consolidated as part of that deal.

Now, the interesting thing about that is, I think, two of those payments were of 3,000 or more, the other one was at least 1,000. By the time we got the deal together, they were able to get access to the working capital they needed, but we had also consolidated three payments from about a combined, what, $7,000 to one payment of just over $3,000.

Host: That's really is phenomenal and a great benefit to a local business. Is there anything else you'd like to add about SBA as we finish up today?

Camden Davenport: I did have a couple of resources here for anyone who might listen if they wanted to go and do some research on their own. Of course, the first being sba.gov. They have a lot of information on there, just going over the different types of loans SBA may have to offer. Like you had mentioned in the beginning, they have a lot of resources, development programs, stuff like that, if you were wanting to look into that.

The other is isbdc.org. That is the Indiana Small Business Development Center. They have a lot of that same type of information for anyone who was maybe thinking of getting started. They have a lot of development information on there as well, a lot of good information.

Host: Well, that's phenomenal, both on a national level and a more local level to have those resources. So, as we wrap up this podcast, I want to extend my gratitude to our guest, Cam Davenport, for shedding light on the importance of SBA loans in the world of small businesses.

Now, this knowledge shared today has undoubtedly provided us valuable insights. Both seasoned entrepreneurs and those just embarking on their business journey can benefit from this. For more information, you can also visit heritagefederal.org/sba.

Thanks for listening to Talking Cents with Heritage. I'm your host, Dr. Bob Underwood. If you found this podcast to be helpful, please share it on your social channels and be sure to check out the entire Talking Cents with Heritage podcast library.

Loans may be subject to credit review and approval, and property insurance may be required. Membership restrictions may apply. The views and opinions expressed in this podcast are those of the speakers and do not necessarily reflect the views and positions of Heritage Federal Credit Union.