The Price of Your Dream, Is It Worth It?
Government-backed SBA financing is offered to small businesses in order to make small business financing available with lower down payments, longer repayment terms, and easier qualifying criteria than conventional bank loans. Small businesses can use SBA financing to buy a building for their business, to construct a new building, to remodel the facility, to buy new equipment, to acquire a business, to buy out a partner, to obtain working capital for expansion, or to refinance existing debt for better repayment terms.
Because the SBA 7(a) loan program gives participating lenders a 75-85% government guaranty on the loan to help encourage more loan approvals, the borrower must pay an SBA guaranty fee to the SBA. The SBA guaranty fee may seem higher than conventional loan fees; therefore small businesses need to justify the cost.
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