How SBA 7 A Loans Can Help You Grow Your Business

SBA 7(a) loans can open doors for business leaders, whether it’s buying commercial real estate with little or no down payment or obtaining working capital at reasonable rates when they don’t qualify with conventional lenders. The process is relatively streamlined and follows similar underwriting, due diligence and closing procedures as other conventional loan programs.

The SBA Guaranty

The SBA’s guarantee makes it easier for businesses to secure financing that might otherwise be out of reach. Combined with flexible requirements and lower interest rates, it can open doors for business leaders who haven’t built enough equity in their company or have personal financial situations that wouldn’t allow them to qualify for conventional loans.

With 7(a) loan amounts up to $5 million, the guaranty can help small businesses finance real estate and equipment purchases, debt refinancing, working capital and more. While there are additional eligibility requirements and application processes, these typically mirror those of conventional business loans. Lenders may also charge an upfront and/or yearly service fee, but they are typically lower than those charged for other types of business financing.

Flexible Requirements

SBA 7(a) loans offer a suite of financing options meant to address different business needs. From acquiring commercial real estate to accessing working capital that doesn’t quite qualify you for a conventional bank loan, there’s a 7(a) solution that can help your company reach its goals.
Lenders can customize the amount, documentation and repayment terms to fit your business’s unique needs. You can also use a line of credit to fund seasonal increases in accounts receivable or inventory or to finance contracts. The flexible requirements make it easier for startup businesses and those with less-established credit to qualify, while the government guarantee decreases a lender’s risk. The loan program’s longer-term can also provide lower monthly payments than traditional bank loans.

Lower Interest Rates

SBA 7(a) loans offer lower interest rates than conventional business loan programs. These are due to the lowered risk for lenders and the government-backed guarantee.
If you want to qualify for lower interest rates on an SBA 7(a) loan, it’s important to maintain a healthy credit score. Clean up errors on your credit report and avoid using a lot of credit in order to increase your chances of qualifying for a lower rate.You can use your 7(a) loan funds for a variety of purposes, including purchasing equipment and furniture, expanding or renovating your current premises, buying commercial real estate, and refinancing debt. You can also use it to pay for hiring and training employees. The SBA CAPLines working capital pilot program is one of the most flexible options available.

Longer Terms

The longer loan terms available for SBA 7(a) loans can provide greater flexibility to address cash flow issues, and fund seasonal income fluctuations or unexpected expenses. This can be especially helpful to small businesses that may not qualify for conventional business financing.
Additionally, long loan terms can help lower monthly payments. Lenders can offer either a fixed rate or a variable rate that is tied to the Prime Interest Rate. They are also allowed to charge loan processing, origination, application, renewal and broker fees.

While each lender has their own requirements, there are standard pieces of information and paperwork all prospective SBA borrowers must gather. Talk with a local Grow America financial advisor today to see if an SBA 7(a) loan is right for you.

Refinancing

If you have an existing SBA 7(a) loan with a high interest rate, you can often refinance it to a lower one. However, there are some important things to consider before you refinance your SBA loan.
You should also be aware of lender fees. These fees are charged by lenders and are based on the type of 7(a) loan you choose. For example, the Builders CAPLine loan allows lenders to charge a fee for the financing of construction costs.
Other SBA loans have different fee structures, but they all include a guarantee fee. You should also be prepared for the fact that you may have to provide a personal guarantee for SBA 7(a) loans. This is typically required if your business has multiple owners or if your equity in the company is less than 20%.

Wrap Up

If you’re looking to secure an SBA 7(a) loan, Bitx Capital is your go-to resource. They have a network of reliable lenders ready to provide you with the financial assistance you need. With Bitx Capital, you can access tailored loan solutions, flexible terms, and competitive rates, making the process of obtaining an SBA 7(a) loan straightforward and efficient. Don’t hesitate to reach out to Bitx Capital to explore your options and take the first step towards growing your business.