SBA 7a Loans: Still a Great Option!

If you’ve been in the market for an SBA 7a loan since the pandemic hit, you know that Congress provided several relief benefits that helped business owners weather the COVID storm.

Specifically, the 7a program was enhanced by increasing the government loan guarantee to 90 percent; forgiving the standard SBA Loan Guarantee Fee; and waiving the first three months of loan payments. Those subsidies were of great help to many small business owners accessing new loans during this challenging period.

Unfortunately, those benefits are scheduled to elapse on Sept 30, 2021. But that doesn’t mean the 7a program isn’t still a great option. In fact, in many cases it might be the only option if you don’t qualify for a conventional loan from your local bank.

Here are some of the many benefits of the SBA 7a loan program:

• Many types of business are eligible, including gas station/C-stores, self-storage, assisted living, medical/dental, etc. Most franchise brands qualify for the program, which means their franchisees can access most of the costs of building and opening a startup franchise business.
• Highly competitive interest rates that are lower than most alternatives.
• Low down payments, typically between 10%-20%.
• No prepayment penalties.
• Longer loan terms than most alternatives (typically 10 years, or up to 25 years if real estate is involved).
• Can be used to buy another business, restructure existing debt, increase working capital, and many other uses.

For business owners with solid credit, a sound business plan, and good record-keeping, the SBA 7a loan is a great option and one that should always be considered when weighing your financing needs. Preferred Capital Funding has many years of experience helping clients navigate the process of applying for and obtaining a 7a loan, and we’re happy to discuss your situation to see whether this option is a good one for you.