Looking for money? Consider an SBA Loan. You get:

  • Longer repayment terms — SBA loan terms are typically for significantly longer terms than conventional commercial loans or leasing programs. Resulting benefits to borrowers are:
    • Reduced monthly loan payments and increased cash flow.
    • Capital is freed up for other business uses and can be reinvested in the business.
    • Allows existing Lines of Credit to be used more appropriately.
  • Reduced Closing Costs — SBA closing fees are generally less than those charged for most conventional commercial loans.
    • The SBA’s guaranty fee ranges from 1.0% to 3.5% on 75% of the loan amount (increasing as the loan increases). If the loan guarantee is in excess of $1MM, there will be a .0025% surcharge on the amount in excess of $1MM.
    • Regulations restrict Banks from charging any loan commitment fees on SBA 7a loans.
  • Competitive interest rates — The SBA limits the rate a Bank can charge to Prime + 2.75%. Conventional Lenders often charge higher rates if the proposed loan is approved at all.
  • No prepayment penalties — On loans with maturities of under 15 years, there are no prepayment penalties.

by Frank Joworisak, Financial Consultant