Trouble getting a loan or looking for more options? Don’t give up. If you’ve tried unsuccessfully to finance your business, consider a Small Business Administration (SBA) loan. These can fund equipment, real estate, working capital and many other needs. A local, relationship bank can talk with you about SBA loan options for Minnesota businesses. Your lender can also see if a customized traditional loan might better address your unique challenges.
Expand your options
SBA loans aren’t just for new or struggling businesses. A range of unique circumstances can make an SBA loan more attractive to your company. If you’re an exporter, operate in a rural area, or have other special requirements, an SBA loan could be the right solution. If you’ve been unable to find sufficient funding through traditional means for some reason, consider an SBA loan.
Whatever your need, it may be time to expand your options.
Look into an SBA loan by talking with an SBA-approved lender. The SBA does not make loans directly to businesses. SBA loans allow banks to offer more options by partially backing up the loan. This way, a lender can offer financing with a lower down payment or a longer term without taking on increased risk. If the borrower defaults, the SBA will cover a portion of the loan.
The benefits of SBA loans
Most small businesses are eligible for SBA funding. These are the main requirements:
- You’re a for-profit business.
- You do business in the U.S.
- You’ve invested your own time and money into the business.
- The SBA makes loans of up to $5 million.
The SBA offers two main loan options:
- 7(a) loan: These are the most common SBA loans. A 7(a) loan can be used for a wide range of needs, including start-up costs and working capital. It can also be used for fixed assets and to refinance debt. They guarantee 85% of loans up to $150,000 and 75% of larger loans. The SBA sets caps on interest rates. You’ll work with your lender to determine a rate within the SBA’s guidelines.
Here are the maximum terms:
- Working Capital - 7 years
- Purchases - 10 years
- Real Estate - 25 years
- 504 Loan: These loans finance the acquisition of fixed assets, like real estate or equipment. A 504 loan can come with a fixed rate of up to 10 to 20 years. Your down payment can be as little as 10%.
An SBA loan is worth investigating and may end up being the right solution for you. But they’re not easy to get, and they can come with some drawbacks: the process can be slow and, in some cases, the collateral requirements can be high.
An SBA loan isn’t a silver bullet. To find the loan that fits your business’ situation, give yourself as many options as possible.
If you haven’t already, consider the limitations of the lenders you’ve approached. They may not understand your business and its needs well enough, or they may not have the flexibility to tailor their products to your situation. You may not really have exhausted your traditional loan options yet.
If you’ve been unable to get the loan you need, establish a relationship with a bank that can help you take a fresh look at your situation. A lender with experience handling SBA loans can help you evaluate this option. Consider working with a local, Minnesota lender focused on personalized service and building customer relationships.
You may find, as you talk with your lender, that an SBA loan would be a good fit. You may find, though, that working closely with a consultative lender leads to other options. A traditional loan can often be a better choice. A lender who knows you and the Minnesota small business environment well may be able to create the right solution.
The way to truly expand your options is to build a relationship with a bank that can customize a loan to fit your unique needs.
Find a partner who’s focused on solutions
In the end, what you may need most is a partner who can offer knowledge and personalized options.
Flagship is an experienced SBA Lender. As we get to know you, your business, and your current needs, we can help you evaluate the fit of an SBA loan. Because investing in clients is what we do, we’re committed to finding the solution that’s right for you.
We’re also experts on Minnesota small businesses. We can combine that knowledge with our growing knowledge of your company to create a traditional loan solution to meet your unique need. We’re always investing in you.
At Flagship, we’re only satisfied if you succeed. We’d love to learn about your business and help you tackle your current challenges. Let’s start a conversation today.