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Are you a business owner looking to fund your construction project? The world of financing can be overwhelming, but there's good news – you can leverage the power of SBA loans to make your project a reality. In this post, we'll explore the potential of combining SBA 504 and 7A loans for construction projects and working capital. Read on to discover how this strategy can open up new avenues for your business growth.
Can You Combine SBA 504 and 7A Loans?
The question arises: Can you blend the benefits of SBA 504 and 7A loans to address both the construction project's financial needs and the necessary working capital? The answer is a resounding yes! Many financial institutions, including our bank, have successfully utilized this approach to support businesses in their expansion endeavors.
A Practical Example: Making It Work
Let's delve into a real-life scenario to illustrate the concept better. Imagine you're overseeing a construction project – let's say it's a self-storage facility. Beyond the construction expenses, you also need working capital to cover employee salaries and other operational costs for a few months.
Traditionally, 504 loans are a go-to choice for construction projects due to their favorable terms. However, certain items crucial for daily operations might not be eligible under a 504 loan. This is where the versatility of 7A loans comes into play.
Consider the case of a franchise restaurant. We recently facilitated a 7A loan for this restaurant, positioning it as a supplementary financing option. This piggyback loan arrangement, in third position after the primary loans, provided working capital for inventory. These funds were crucial for sustaining day-to-day operations – a role that isn't covered by a standard 504 loan.
Breaking Down the Benefits
What makes this approach attractive? By strategically pairing SBA 504 and 7A loans, you're maximizing the potential of each loan type. The 504 loan handles the construction-related expenses, ensuring you get favorable terms and low down payments. On the other hand, the 7A loan steps in to fill the working capital gaps left by the 504 loan's limitations.
Exploring Your Options
Are you intrigued by the possibilities? Whether you're venturing into a startup, purchasing an existing business, buying a franchise, or expanding your current enterprise, there's a financing solution for you. We offer comprehensive guidance through the intricacies of both the 7A and 504 SBA loan processes.
Not sure where to start? Fret not. Our team is here to assist you every step of the way. Book a call with us to discuss your unique financial needs and aspirations. We'll walk you through the process, answer your questions, and help you make an informed decision.
Conclusion
In the complex world of business financing, innovation is key. By considering the blend of SBA 504 and 7A loans, you're unlocking opportunities for your construction project's success. The case of the franchise restaurant underscores the effectiveness of this strategy in ensuring your project thrives both during and after construction. Don't let financial constraints hold you back – explore the synergies of SBA loans and embark on your journey towards business growth.