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Are you a small business owner looking to expand but struggling to secure financing? The Small Business Administration (SBA) offers several loan programs to help entrepreneurs grow their businesses, one of which is the SBA 7(a) Loan Program. In this blog post, we'll discuss how this program can help you secure working capital to expand your business.
Can you get working capital with an SBA 7(a) loan?
The short answer is yes, you can get working capital with an SBA 7(a) loan. However, it's important to note that not all SBA lenders offer working capital loans. Typically, SBA lenders prefer to fund larger projects such as real estate purchases, equipment financing, and business acquisitions. Working capital loans, on the other hand, are often considered riskier and less profitable for lenders.
How is the loan underwritten?
If you're seeking a working capital loan through the SBA 7(a) Loan Program, lenders will typically look at your revenue to determine the maximum loan amount you can receive. The loan amount is usually between 15 to 35 percent of your revenue. For example, if your business had a gross revenue of $1 million last year, you could expect to receive a working capital line of $300,000 to $350,000.
Another caveat with working capital loans is that lenders may require you to have a plan for how you will use the funds. This means that you will need to have a clear idea of where the money will go and how it will be used before you can receive the loan. Some lenders may also require you to deploy the funds upfront, meaning that you will need to allocate and spend the money as soon as you receive it.
Where can you find an SBA lender?
As mentioned earlier, not all SBA lenders offer working capital loans. However, there are lenders who specialize in these types of loans, and they can help you secure the financing you need to grow your business. If you're interested in exploring your options, you can visit Bookwithbo.com, where you can discuss your particular scenario in detail.
Conclusion
Expanding your business can be an exciting but challenging endeavor, especially when it comes to securing financing. However, with the SBA 7(a) Loan Program, you have access to funding that can help you achieve your goals. While working capital loans can be more difficult to secure than other types of loans, there are lenders who specialize in them and can help you get the financing you need. So, if you're a small business owner looking to expand, consider exploring your options with the SBA 7(a) Loan Program.