Each quarter we feature a commercial lender answering some of the most commonly asked questions about business loans.

If you would like to submit a question for this column, please email info@cnbohio.com.


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How much money am I looking for?

While you may assume the best amount to ask for is "the most money I can get", this isn't necessarily a great strategy for a business. This answer tells a potential lender that you haven't really thought through your loan purpose. Your loan purpose should drive the answer to this question.

Those taking out the loan need to understand the costs associated with borrowing additional money that they may not necessarily need for the actual request on hand. It is important for business clients to ask themselves, "What is my true return on investment going to be should I decide to take out a loan?"

  • Is it going to increase the production capacity leading to additional sales and additional income for the business?
  • Are the additional funds worth paying interest on if I don't really need them right now?
  • Will I be able to borrow money down the road if I already have too much equity tied up with an existing loan?

There are costs associated with borrowing that should be thoughtfully considered every time you seek borrowed funds. In other words, borrow what is required to fulfill your business need, but no more. For questions about ways to expand and determining if a business loan is the right option for you, consult with a commercial lender who understands the different options available.


What is an SBA Loan?

The Small Business Administration, SBA, offers many types of financing programs geared towards aiding small businesses in growing or starting a business.

How these programs work is that the SBA guarantees up to a certain amount of the loan so the bank has less risk in taking on the loan. Citizens National Bank is an approved administrator of SBA loan programs. What that means is the business owner works directly with a lender at our bank and we complete the paperwork to apply for those programs as needed. There are 3 main programs CNB works with: SBAExpress, SBA 7A Guaranteed Loans, and the SBA 504 Loans.

  • The SBAExpress is geared toward small business loans of less than $350,000. The purpose is to start or grow a business. Applications are responded to within 36 hours.
  • The SBA 7A Guaranteed Loan has a maximum loan amount of $5 million. The purpose is to establish a new business or assist in acquisition, operation or expansion of an existing business. Both fixed and variable interest rate structures are available.
  • The SBA 504 Loan has a maximum loan amount of $4-$5.5 million depending upon how funds will be used. It must support one of three goals; job creation, public policy or small manufacturing. Maturity terms of 10 and 20 years are available.

To determine whether or not one of these programs will benefit you, simply contact a CNB business banking officer and discuss your goals for starting or expanding your business. Once we review your financials and business plan, we'll consider whether SBA financing is a viable option. To learn more about how SBA loan programs work, view our video.


Should I switch my credit card machine to accept chip enabled cards?

EMV (Europay, Mastercard and Visa), or chip enabled cards, are common place in most foreign countries and provide a higher level of security against fraud than the magnetic stripe cards seen most frequently in the US.

On traditional credit cards, the magnetic stripe holds the information necessary to make a transaction and that information never changes, so if stolen it can be used to make new cards or online purchases. With the EMV card, the computer chip in the card creates a unique transaction code that cannot be used again. According to creditcards.com, "If a hacker stole the chip information from one specific point of sale, typical card duplication would never work because the stolen transaction number created in that instance wouldn't be usable again and the card would just get denied."

Until last year, most companies had not felt an urgency to switch to the chip enabled cards simply due to the expense of reissuing cards and trading out credit card machines for upgraded models. Unfortunately, the large breaches we have seen with Target, and then Home Depot, have brought the need for more heightened security for credit cards to the forefront. As of October 15, 2015, if a company that accepts credit card for payment does not accept EMV cards, the liability for any loss will shift to that company rather than the credit card issuer.

For this reason, it is in your best interest to upgrade your merchant credit card machines to accept the newer cards. You will have some initial cost in replacing your machine. Locally the cost to purchase the new machines range between $300 and $500. While not cheap, this investment will insure you do not take the hit for a fraudulent transaction, which could easily exceed the cost of upgrading with just one incident.

If you are interested in learning more about accepting credit card payments at your place of business, contact a business banking officer to discuss our Merchant Services Program.


Head shot of Jason LaBounty

Jason LaBounty

SVP Commercial/Ag Lending

Phone: (419) 782-2032, ext. 226


What are the benefits of having a line of credit?

A business line of credit can be a very valuable tool to a business or agricultural owner.

Citizens National Bank lines of credit are designed to help businesses manage their cash flow and their short term borrowing needs. Our lines of credit can be used to purchase inventory or pay bills, including payroll, while you wait for receivables to be collected, or to cover seasonal operating needs and expenses. A line of credit typically is set up for one year or for the normal operating cycle of your business. Interest only payments are due periodically until the maturity date of the line of credit. Our clients are all very important to us and we would love to help you with your line of credit.

Benefits include:

  • Access your funds quickly and easily through Online for Business or by phone.
  • Competitive interest rates.
  • Pay interest only on the portion of the line of credit in use.
  • With a revolving line of credit: when you make a payment, you replenish the credit available to your business.
  • A community bank with local decision making.
  • Experienced loan officers at all locations.

To determine your potential payment on a line of credit, check out our loan payments calculator.


Head shot of Bob Inniger

Bob Inniger

VP Commercial/Ag Lending

Phone: (419) 358-8060, ext. 148


What are SBA loans and how can they help?

There are many situations when we partner with the Small Business Administration to provide credit to the business community.

The most popular program according to our customers is the SBA504 loan program. It allows a business to finance up to 90% of the cost of a project. The most attractive feature is that approximately half of the financing is eligible for a long term fixed rate of interest. The 504 program is very well suited to a real estate or equipment purchase along with construction projects.

Two other SBA programs we utilize are the 7A program and the SBA Express. The 7A program provides additional security to the bank due to the 75% guaranty the SBA provides. This allows a highly leveraged company to expand its operations while providing the bank with a guaranty thereby limiting any potential loss. The SBA Express program is very similar to the 7A program except it has a 50% guaranty and the maximum loan size is $350,000.00. The Express program has a streamlined paperwork process and is perfect for a lot of smaller companies.

One last program to mention is the State of Ohio 166 loan program. The 166 program is very similar to the SBA504, but it is administered through JobsOhio versus the Small Business Administration. The rates and fees are typically less than the SBA504 rates and fees. The only drawback is that the program is limited to manufacturing and warehousing operations. Retail businesses are not eligible to participate.

We highly recommend that every business evaluate all the available loan programs when making a fixed asset purchase or expansion. Many times the benefits of these programs far exceed the costs.

SBA Lending: Under the 7(a) program the SBA will guarantee up to $5mm or 75% of the loan amount, whichever is less. Under the SBA Express program the amount is $350,000 or less and up to 50% of the loan amount. Under the 504 program, the SBA through a Certified Development Company (CDC) will fund up to $5mm with 50% financed by a bank, 40% by the CDC and 10% by the business.


Head shot of Pat Ryan

Pat Ryan

SVP Commercial Lending

Phone: (419) 238-1080, ext. 531


What are my financing options for purchasing equipment?

There are several options to consider when financing equipment.

Most often equipment is purchased with conventional bank financing. Under conventional financing you can expect the bank to finance up to 80% of the cost of new equipment or less depending on the age and use of the equipment. Repayment terms are typically set for 7 years or less and rates can be fixed or variable during that time.

For larger equipment purchases or in instances when there isn't enough cash, or equity for a down payment, other financing programs can be utilized. The State of Ohio 166 program allows a business owner to purchase equipment with as little as 10% down. Forty percent of the funds for the rest of the purchase would come from the program and the remaining 50% would be financed by the bank. While there are additional upfront costs involved, the program provides a fixed rate on the 40% it provides as well as a term of up to 10 years.

Leasing may also be an option a business would want to consider. Leasing offers many potential benefits over purchasing but has its drawbacks as well. Leasing generally requires a smaller upfront investment and results in lower monthly payments. Also, leases are accounted for differently than loans which could result in some tax benefits for the business*.

Additionally, some leases include maintenance agreements which could lessen or eliminate those costs over the term of the lease. As a result of these benefits leases are generally more expensive over the entirety of the agreement. Owners must also plan for the end of the lease which will either have a buyout option that would need funded or the equipment is returned which creates a need to replace the equipment if it is still needed.

It is not always possible but it is best to plan your equipment purchase well before you actually need it. Your lender will help you weigh your options and choose the best course of action for your particular circumstances. If you are thinking about purchasing equipment now or think that you will need to make a purchase in the upcoming year please call your lender today to get your plan in place.

*Consult your tax advisor.


Should I buy or lease a building for my business?

There are pros and cons to buying or leasing a facility for your business.

As a business owner, it's important to think about a few things:

  • How long do you think you want to be in that particular building or location?
  • Will you eventually outgrow it?
  • Are you willing to take on long-term debt?
  • Will you want to maintain ownership of the building even if you sell your business?
  • Could you consider leasing space to another company for extra income?

Estimating the anticipated growth of your company and the amount of time you think a particular building will meet your needs is a big consideration. If you foresee your building being adequate for 15 years or more, purchasing may be the right option for you. You will build up equity and have the opportunity to rent space to another company for extra income if you have additional square footage available.

If you think you'll outgrow it soon and don't have the ability to add on to your current space, leasing may continue to be the better option. Leasing also provides the benefit of lower overhead for your business and you can often write off the payment for tax purposes.

Looking ahead to when you're ready to retire, if you own the building, you will need to consider if you will sell it along with your business or maintain ownership of the building itself. How close you are to retirement may also play a role in deciding whether or not you're willing to take on the long-term debt real estate offers.

Due to the recession, the inventory of commercial buildings for sale is larger than in the past and thus, prices may be low enough to make purchasing a good business decision. Rates are still historically low and we work with the SBA and other local financing programs to provide you the most affordable option. Consult your accountant to determine if purchasing or leasing might be the best option for you, then give us a call!


Head shot of Al Saylor

Al Saylor

VP Commercial/Ag Lending

Phone: (419) 238-1080, ext. 537


How long will it take to find out if I'm approved for a commercial loan?

This is a great question! Being a locally owned privately held community bank we have an advantage over some of our larger competitors with local decision-making on our loans.

We always want to get an answer back to our clients as soon as we can and we have a loan committee that meets weekly. The time frame will vary based on what is being used as collateral and the size of the transaction.

If you are purchasing a piece of equipment for $100,000 it may only take a couple days to get the loan closed and have the check in-hand. But let's say you are purchasing a parcel of commercial or agricultural land and the loan amount is $1 million. This loan may take a while longer because of a few extra steps we will need to take due to regulatory requirements such as a new appraisal and title (search) opinion on the property. Through this process it may take an average of three to five weeks to close, depending on how quick we get these items completed.

The other factor that will determine Citizens' turnaround time is if we already have your current financial information, such as tax returns and financial statements, or if we need to collect this information from you. If we have this information on file, we can get the loan application started right away, which will speed up the underwriting and closing process. If we do not already have this information, then it will depend on how quickly it can be provided to us. We will work the quickest we can to meet your specific time frames. Our clients are very important to us!

Head shot of Rick Beverly

Rick Beverly

SVP Commercial Lending

Phone: (419) 427-2920, ext. 643


More Information

To learn more about how our commercial loan services can benefit your business today, call:


Mon - Fri: 8:30 AM - 5:00 PM EST


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