Ideas for funding your business
Dec 20, 2011
Many small businesses rely on loans for funding. Recently, the U.S. Small Business Administration (SBA) increased the size restrictions for eligible businesses, increasing the (tangible) net worth to $15 million and the two-year average (net) income to $5 million. This allows much larger businesses to qualify.
So what can this mean for you? It may mean many new loan programs are available to you.
One opportunity lies in the SBA 7a loan. This makes funds available for commercial property, working capital, debt consolidation and more. This loan is very flexible and can be used for "any legitimate business purpose." The new maximum loan is $5 million and a business can have a tangible net worth of up to $15 million and net (after tax) income up to $5 million.
These loans may be used for most business purposes, including:
- Refinancing of commercial real estate
- Construction of a new building
- Refinancing of business debt
- Purchase of an existing business
- Working capital
- Purchase of real estate
- Tenant improvements
- Equipment financing
- Leases
- Inventory
The SBA 7a loan may also be a good option to refinance your current business loan. It can be used to refinance the following types of business debt:
- Long term debt with a balloon
- Business credit card debt – as long as you can show it was used for business purposes
- Revolving lines of credit
- SBA 504 loans
- Green 504 loans
- SBA loan for energy efficient buildings, green building construction, green retrofit and renovation and renewable energy production for business use
The rate for the SBA 7a loan is typically the prime rate plus a margin not to exceed 2.75 percent. Some lenders will offer very good 3- or 5-year fixed rates that adjust after the initial fixed period. It allows for both larger SBA loans and multiple SBA loans to the same borrower(s). SBA programs are also open to medium-sized businesses with loans in excess of $12 million.
These are merely a few opportunities available through the Small Business Administration. For complete details of all the programs available, lending criteria and to determine if your business qualifies, visit the SBA website or contact us via email or 410.685.5512.
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