Research shows that to date, 489,000 startup companies have received 7(a) loan program funding in 2012. Further research shows that 3.67 million existing businesses have received funds from this program. The SBA’s 504 program is flourishing due to the refinancing program. The SBA has approved $5 billion in 504 loans so far this year, which is up $3.8 billion from last year.
SBA small business plans were designed to help small entrepreneurs start or expand their business. The SBA offers lending institutions a guarantee up to a percentage of the SBA small business loan being issued. This guarantee lowers the risk of the lending institution, which in return increases loan approvals to small business owners.
“Economists and the greatest financial minds in our country all know that maintaining the pace of the recovery is in some ways dependent on the small business. With that being said, banks and credit unions are slowly beginning to trust small business owners again; this is the only way we can see complete economic recovery”, says Joe Ferriolo, Director of Wise Business Plans.
Repayment Periods: Longer repayment periods are made available through the SBA 7(a) program. “Whereas traditional lenders offer 15 to 20 year terms, the SBA 7(a) program offers 25 year terms. The size of the payments is reduced tremendously when you have these longer terms and it can be the difference between a business staying afloat or going under”, says Mr. Ferriolo.
Lack of balloon payments: Balloon payments that are often associated with borrowing from banks and credit unions are not a part of SBA 7 (a) programs. “A lot of times small business owners are haunted by balloon payments that are looming. They can be years down the line but they still need to be accounted for. With consistent, even payments over the life of the loan, small businesses are less likely to take risks that place their business and the relationship with the lender in jeopardy”, says Mr. Ferriolo.
Greater Flexibility: Programs offered by the Small Business Administration often come with a great deal more flexibility than those offered by traditional banks. “While we understand that there are going to be levels of accountability including credit history and the like, what we find is that the SBA is much more willing to review on a case by case basis as opposed to offering a flat denial”, says Mr. Ferriolo.
The Small Business Administration has a variety of programs available for business owners throughout the nation. From new to existing businesses, when the time comes to seek additional funding, let the professionals at Wise Business Plan handle all your SBA small business loan needs.
Wise Business Plans is a professional business plan writing company that creates SBA compliant business plans. The firm is committed to helping small businesses achieve SBA funding. To learn more, visit //wisebusinessplans.comor call 1-800-496-1056 to schedule a consultation.