SBA Benefits: 3 Reasons to Consider an SBA Loan
Creating a sound financial strategy that reflects the specific priorities and goals of your business is essential in today's swiftly changing market. A Small Business Administration loan, or SBA loan, may offer the flexibility to meet a broad set of needs. Here are three key reasons to consider 7(a) funding for your current financing strategy.
1Reduced down payment options
Traditional financing may require a down payment of that can range between 15% and 30% of the purchase price or project cost. SBA financing has historically required a lower down payment, and in some circumstances SBA lenders have the ability to finance up to 100% of the transaction. These lower down payment requirements are key in allowing you to preserve much-needed working capital.
2A range of allowable uses
With loan amounts of $50,000 to $5,000,000 available, you can wrap multiple aspects of a project's funding needs into one loan such as real estate, improvements to real estate, equipment, working capital and closing costs. SBA allows all eligible uses of proceeds to be rolled into one loan, at one term and one rate—unlike conventional options where the business often pieces together several loans, at different terms and rates, to meet the overall need.
3Longer repayment terms
Another advantage of the SBA 7(a) loan is that you can repay it over a longer period of time than conventional financing. Simply calculate how long it might take to repay your loan for a better understanding of the timeframe. The SBA 7(a) loan also offers up to 10-year amortizations for equipment, start-up working capital, leasehold improvement and business acquisition financing. Loans used primarily for real estate benefit from 25-year options. Borrowers can also make additional principal payments to the loan, which can be re-amortized to reduce future monthly payment requirements. For loans with amortizations under 15 years, there are no prepayment penalties. This enables small business owners more flexibility as their needs change.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.