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The ABCs of SBA Loans

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Small Business Loans explained

UMB SBA loans

A loan from the U.S. Small Business Administration (SBA) could be a very useful option for your company, no matter if you are just getting started or if you have been around for years.

SBA loans often allow business owners who may not normally qualify for conventional commercial loans to obtain financing. This includes those who:

  • have less available cash flow,
  • are more leveraged, or
  • have little to no history in operating their business.

However, it is important to know exactly how an SBA loan differs from other loans, what types of SBA loans are available and what to consider when deciding to apply.

How do SBA loans work?

The SBA actually does not make direct loans to small businesses. Rather, when you apply for an SBA loan, you are actually applying for a commercial loan from a bank or another partner lender, structured according to SBA requirements and backed by an SBA guarantee. (The SBA agrees to pay a certain percentage of the loan if the borrower defaults.)

SBA loan vs. a traditional loan:

  • SBA loans usually have a lower down payment requirement, but higher fees
  • collateral requirements: SBA loans might access equity on a person’s home for collateral, which most traditional loans would not do.
  • SBA loans have longer amortization periods and terms. This can lead to a lower payment for the borrower.

What Types of Loans Are Available?

  • 7(a) loans – the most common offered by the SBA and include a variety of loan programs such as SBA Express and CAPLines
  • 504 loans – used primarily for real estate and equipment purchasing

Considering an SBA Loan

Many aspiring business owners are hesitant to go through the SBA loan process. The application process and associated costs seem too daunting. We recommend visiting an SBA Small Business Development Center or SBA’s website to learn more about loan options available and qualifications. These centers can work with applicants not only on loan options, but also can provide resources for business planning.

If an SBA loan seems to be a fit, we recommend working with a banker that is experienced in SBA lending and can help expedite the application process, as well as evaluate all other loan options.

 

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Karaba is a Executive Vice President for UMB Business Banking. He is responsible for Leadership of the Business Banking Business Line at UMB. He joined UMB in 2013 and has 19 years of experience in the financial services industry.



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Do niche markets need niche banking? (The answer may surprise you.)

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What do manufacturing, wholesale distribution, pipeline energy, coal mining, energy services, architecture and engineering firms, law firms, telecommunications and infrastructure construction companies have in common? They are all niche markets that require specialized support from the companies servicing them. They are also industries that have entire dedicated departments within large banks and financial services companies.

UMB Bank niche markets

As a leader at an energy services company, you might see value at first in a banking partner with a whole department dedicated to your specific industry. But what keeps you going back? Is it the number of people assigned to your account or is it the relationship you have with your bank?

I hope it’s the relationship. This is true for all industries; not just banking. If you develop business partnerships based on your relationship with the people at the company, you’ll find that the business part comes naturally. You’re creating additional value for your customers beyond the products and services.

Connecting, not just banking

In our case, we serve all of the industries described above with the same group of commercial bankers. Our bankers know how to lend to all different types of companies. Not only do we know the different industries, but we know how they all fit together.

For example, we’ve found that with our various niche market commercial clients, we can provide unique networking opportunities between them. It gives our customers a chance to develop business relationships outside of the financial industry. We can connect an architecture firm with a technology company that may have otherwise not had the chance to interact. We’re able to provide referrals between our clients; not only within their state but across our eight-state footprint.

When working with your commercial bank, you should see them as more than just a “banker.” They should be a problem-solver, an advisor, and most importantly, a partner. Working outside of your traditional expectations and putting your company’s best interest ahead of everything else should be the top priority.

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Mr. Anderson is President of Commercial Banking for UMB Bank. He is responsible for commercial banking, treasury management, and business banking. He joined UMB in 1986 and has 33 years of experience in the financial services industry.



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New Leadership in Oklahoma

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Oklahoma UMB News

Oklahoma is one of the regions where we focus because it has potential for strong, continued growth. We have a couple of exciting leadership changes to announce that reflect our strong commitment to developing top associates and to continue our development and growth of the Oklahoma region.
David Hardy UMBDavid Hardy is now the CEO of the Oklahoma region, and Matt Badsky has been promoted to market president of Tulsa.

In his previous role as executive vice president, Tulsa market leader, David made great strides in developing the Tulsa market, so this change keeps him focused on building those relationships while also overseeing Oklahoma City and leading the commercial sales teams in those cities. He is dedicated to our customers and will bring additional growth to this region, I’m sure.

Matt’s move to Tulsa to become the market president comes after his role as the chief credit administrative officer of the Kansas region in Wichita. His extensive lending expertise and commercial business development skills, as well as his dedication to UMB and our customers, will have a remarkable impact on the Tulsa region.
Matt Badsky UMB

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Mr. Trout joined UMB in 1988. As Regional CEO for Kansas and Oklahoma, he is responsible for the profitability, leadership development and commercial banking oversight of his regions. Mr. Trout has over 25 years of experience in the financial industry. He earned his MBA from Avila University, and his Executive Leadership Certificate from Washington University.



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Why keeping talented associates is just as important as finding them

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Like every organization, our success depends on hiring talented associates who are dedicated to serving our customers. But RETAINING this talent is just as important. Peter deSilva explains how we provide opportunities for career growth and development – and why so many associates choose to spend their entire career with UMB.

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Mr. deSilva is president and chief operating officer of UMB Financial Corporation. He is also vice chairman of UMB Bank, n.a. Mr. deSilva joined UMB in January 2004. He is primarily responsible for UMB's fee-producing business units and product lines, including Scout Investments; UMB Fund Services, UMB Healthcare Services Payment Solutions, Prairie Capital Management. Additionally, he is responsible for all corporate operations, technology, properties, security and marketing.



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How to use a home equity line of credit

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Finding the treasure within your home
home improvement

We’ve walked you through the steps to buying a new home. Before you finished unpacking, we’re guessing you already started a list of improvements and additions to give your new home a personal touch.

Reports like this one show that you’re not alone. Today, home improvement is becoming a growing trend for many American homeowners. Much of this growth is attributed to a rebound in the housing market and the highest consumer confidence scores since 2008.

So should you tackle a home improvement project?

Whether it’s updating your bathroom or adding more space to accommodate a growing family, improving your home can be a fun experience and a strategic method of increasing its fair market value. Research has shown that adding a deck and turning your attic into a bedroom raise the most value, returning approximately 85 percent of your original investment.

If you are considering making a home improvement, using a home equity line of credit (HELOC) to borrow against the equity in your home may be a good solution for financing the project. With today’s low interest rates and steady rise in home prices, you may have greater opportunity to borrow against your equity.

Some advantages:

  • You can make purchases with a HELOC debit card. Using the card is an easy and efficient way for you to pay for needed items.
  • The flexibility factor – the home equity line is something you can access as many times as you need to, as long as the credit is available. But remember to be disciplined with your spending. If you would like to use the equity in your home for a purchase, the wisest thing to do is use it for investments that help retain or add value to your home.

Give yourself an additional level of comfort by seeking counsel from your banker or financial advisor. This person is experienced in carefully reviewing all the home equity options to ensure you have the appropriate financial resources to complete your project in the most strategic way possible.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Michelle Nischbach joined UMB in 2010. As Territory Sales Director in the consumer bank, she is responsible for overseeing operational and advisory excellence within five primary operating markets: St. Louis, Greater Missouri, Oklahoma, Nebraska and Arizona. Ms. Nischbach has 26 years of experience in the financial industry and earned her MBA from Lindenwood University.



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UMB Insights: Bank Outlook

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Our CEO of UMB Bank gives an inside look into some of our strategies and how we’ve been successful through a variety of economic environments.

 

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Mr. Hagedorn is president and chief executive officer of UMB Bank and vice chairman of UMB Financial Corporation. Prior to this role, Hagedorn served as chief financial officer and chief administrative officer of UMB Financial Corporation. He joined UMB in March 2005.



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Holiday Costs

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Holiday costs. How do they all add up? How do you spend your money and your time?

Holiday Spending Infographic

December holidays by the numbers

 

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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More holiday sales = economic growth (Part II)

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Our Chief Investment Officer reports on the outcome of his predictions made before Black Friday.

See below for more…

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Before Thanksgiving, we suggested that today’s consumers are financially healthier than in past years, which, we think, will drive a robust holiday spending season.

Some of the numbers reported appeared to be a bit Grinch-like. The National Retail Federation reported that Thanksgiving weekend sales were down 11 percent and online sales posted negative growth as well.

Our research at UMB leads us to a more cheerful conclusion, for two primary reasons.

  • Black Friday appears to be losing its reserve. You may recall that in the past retailers competed with one another to be the first store to open on Friday morning. Then they began opening the stores on Thanksgiving. Fast forward to today, when many retailers have promotional items on display prior to the holiday. Perhaps Black Friday has become Black November, meaning that the window of shopping days to be analyzed has become longer than just one weekend.
  • Several online retailers announced robust sales gains. We believe online sales are growing nearly 30 percent this season. We think this is due to the adoption of mobile technology. Since online retailers are open 24/7, so is the option to shop. We are also seeing a shift from brick and mortar stores to online retailers and we expect this trend to continue.

The retail sales data, along with other recently released economic data, supports our forecast of greater than 3 percent GDP growth in the fourth quarter, giving us nice momentum into 2015.

In Part I of this report, we anticipated material job growth this holiday season. The non-farm payroll growth in November proved that to be accurate with a gain of 321,000 jobs, again, supporting GDP growth of well over 3 percent.

Clearly the labor market is strengthening. Unemployment stands at 5.8 percent, and we think it will continue to head lower throughout 2015. Job openings are at a level we haven’t seen since 2001.

The labor market, along with higher stock and home prices and lower energy costs, has boosted consumer confidence. So it was no surprise to us that the University of Michigan’s Consumer Confidence Index has risen to a seven-year high.

Lastly, manufacturing data in the United States is hovering around a three-year high, also supporting our GDP forecast.

The bottom line is that all signs are leading us to believe that consumption will continue at a healthy pace. Since consumption is almost 70 percent of GDP, we think economic growth in 2015 will be between 3 to 3.5 percent; significantly higher than what we have seen throughout the last five years.

Given our optimistic economic outlook, we expect to see favorable returns in the stock market. In 2015 we expect 4 percent revenue growth and 6 percent earnings growth — that should lead to 10 percent total returns.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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The news is out

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Chairman and CEO Mariner Kemper explains reasons behind UMB’s agreement to acquire Marquette Financial Companies.

This is an exciting time for UMB, our associates and our customers. UMB is a strategic buyer, which means we only consider businesses that fit with our strategy and are a financial and cultural fit.

With that in mind, we’ve been actively searching for an opportunity like this and we believe that our agreement with Marquette Financial Companies (MFC) is a home run. Here’s why:

  • We expect the combination of UMB and MFC to be financially attractive with complementary balance sheets.
  • We will enhance our diversified financial services business model.
  • It would add two specialty lending businesses, asset management and trust services.
  • We will increase our banking presence in Arizona and Texas, two key growth markets for UMB.
  • UMB will grow our asset management business in the Minneapolis, Arizona and Texas markets.
  • Our two companies have similar cultures – and that’s important for a successful combination to work.

Marquette meets the many requirements we’ve been looking for in an acquisition. Until the transaction is approved and has closed sometime in mid-2015, both companies will continue to operate separately.

Ideal culture fit

What do we mean by having similar cultures? The main similarities are found in our values … how we approach business and each other with integrity. Ethics. A desire to do the right thing. We’ve both been influenced by a history of strong leadership with deep ties to our communities. Our cultures nurture and practice collaboration and we both place emphasis on diversity and inclusion in the workplace.

Giving back to our communities where we do business through volunteering and financial support also is foundational to our businesses. MFC has primarily focused on affordable housing, community economic development and financial education for youth and adults. We’ve traditionally focused on the arts and financial education, as well as community development.

Both of us care deeply about keeping our associates engaged and retaining them throughout their careers. We’re especially proud of that at UMB.

Why customers should take note

Once this acquisition is approved and closed, expected to be in mid-2015, our customers will have access to more products and services, as well as more locations to conduct business.

Where specifically? Customers of the various MFC businesses will be able to utilize UMB’s banking and wealth management centers in eight states – Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. For UMB customers, they’ll be able to visit Meridian Bank branches in the Phoenix and Ft. Worth areas as they transition to UMB Bank.

Marquette also has specialized business units including business credit, commercial finance, transportation finance and asset management services.

What’s next?

Stay tuned. Both companies will continue to operate separately for now.

  • Customers will continue to do business as usual while the transaction is pending approval.
  • Integration plans are being developed.
  • Our goal is a seamless transition for customers and we pledge to actively communicate.

Great acquisitions work when the cultures fit together. That’s the case here, and I’m confident that it will provide us all with opportunities for future success.

 

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Kemper is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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