SBA Financing For business owners considering as a way to either purchase or refinance a commercial property for their business, there are many distinct benefits over comparable conventional bank financing with the SBA programs. The main benefits of Small Business Administration Financing include, higher loan to value, reliability of closing, and good loan programs.
Is the SBA Loan Your Best Answer?
SBA Loan Financing
90% financing via the SBA loan program is common on purchases whether via the SAB 7a program or the 504 program. 85% financing on refinances is common on the 7a program as well. Comparable conventional loans are for the most part capped at 65 -70% of purchases and 55% – 60% on refinances.
For most small businesses keeping as much cash in the business, and not tying it up in there building is critical. Reserve are absolutely needed to help weather the ups and downs of day to day business. Running out of cash is one of the leading causes of failed businesses.
Applying for a Small Business Loan
There are times, especially when your business is in the initial stage of growth, where you need more cash than you have on hand. A small business loan can be a great way to kick start your small business plan or to help grow your current business venture. However, many banks have imposed stricter lending requirements on small business loans, making it even harder to get. That is why so many small business owners turn to the SBA to assist them in times of financial stress.
The SBA will help you to both apply for your SBA loan and to plan for future interest payments and loan principal repayments. The SBA can provide assistance in lending cash to your small business .Numerous banks offer small business loans in for business expansion or for property and equipment. Some banks provide startup SBA business loans. However, these loans require a business plan and the proper presentation. Most small business loans are secured, which mean they require some form of collateral. Unsecured business loans do not require collateral and will allow for faster approvals after filling out a simple 1-2 page application.
If you decide to go to your local bank for a loan you should make sure to bring proper documentation of your business plan as well as financial statements and an itemized list of assets you can use as collateral (ex: real estate, stocks & stocks, and other personal assets). If banks see that you plan on investing a large percentage of the initial funding into the small business they will be more likely to approve the small business loan.