The Refi with Expansion is a valuable tool for small business owners who have existing debt on their property and are in need of a major renovation or expansion.
The new project can include all new costs, in addition to existing debt. Unfortunately, the cost of the building improvements required to meet the standards of an FDA approved manufacturing facility far exceeded the original budget, as well as the maximum loan amount under the 7a loan program. The business owners were in jeopardy of losing their building and absorbing a huge financial loss.
Ultimately, this manufacture was able to then take advantage of a long term, below-market, fixed rate loan AND fund the improvements as well as the new equipment! Read More. Department of Agriculture. Contact us to learn more. Before you consider refinancing, look at your business. Has anything changed since you last financed it? Has your credit score improved? What about revenues? How long have you been in business? If things are looking positive in each of these areas, then your chances of securing refinancing will go up.
Our SBA experts will help you better understand the program and guide you through the application process. Business owners can use the SBA 7 a loan to get better terms on existing debts or business mortgages. Instead, banks, credit unions, or other lending institutions lend to the business. The SBA simply backs the loan agrees to repay it if the borrower defaults , ultimately reducing the amount of risk the lender takes on. The loan can be used to buy real estate or land , treated like working capital , or spent on equipment costs.
Small businesses can also use the SBA 7 a loan to refinance existing debt. Because your lender will need to get approval from the SBA to back your loan, the application process and paperwork for an SBA 7 a loan can be lengthy. However, these loans typically boast better terms than traditional small business loans, and sometimes even come with counseling to ensure your business runs efficiently.
SBA 7 a loans have attractive interest rates, repayment terms, and closing costs, but they do have stricter qualification requirements than some other business loans.
Generally, here are the eligibility requirements for refinancing with an SBA 7a:. For franchisees, a paid franchise fee before the loan funds are released. A clean criminal history, or the ability to explain any misdemeanors on your record.
In addition, the business that will benefit from the refinanced debt will generally need to be:. A small business by definition.
These requirements ensure that the loan is eligible for SBA backing. Cash flow can be hard enough to manage on a day to day basis. If you find yourself juggling multiple loans — all with their own unique terms and features — it can exacerbate an already tenuous situation. Using an SBA loan to refinance debt could be especially attractive if you regularly need to invest in new equipment or technology for your business. When cash flow is tight , every penny counts.
One way to free up more cash is to refinance business debt at a lower rate over a longer repayment period to lower your monthly expenses. Replace the stringent terms attached to a line of credit with a loan that has more attractive features. Getting an SBA loan for business debt refinancing gives you more breathing room for how the funds are used and repaid. Interest rates are currently hovering near historic lows. These low rates mean that there could be no better time to refinance your debt with an SBA 7 a loan.
Just follow this link to go to the application page. Submit evidence that the terms of your existing business loan are unattainable for you.
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