June 21

Mid-Construction SBA Financing

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Welcome to our comprehensive guide on mid-construction SBA financing! In this post, we’ll delve into the details of how SBA financing can be a game-changer for your construction projects, especially if you're running short on funds mid-way. Let's explore why this option might be the key to successfully completing your construction endeavors without the financial stress.

Why Choose SBA Financing Over Bridge Loans?

Many people start their construction projects with a bridge loan or short-term temporary loan. While this can seem like a quick solution, it often leads to financial strain. Bridge loans are meant to be temporary, and they may not cover all the working capital you need. This is where SBA financing comes in as a more advantageous option.

Benefits of SBA Financing

  1. Built-in Working Capital: SBA loans include working capital, which means you won’t have to scramble for additional funds mid-construction.
  2. Comprehensive Planning: By structuring your financing with SBA from the start, you can avoid the common pitfall of running out of proceeds.
  3. Avoid Personal Debt: Many borrowers resort to using personal credit cards when they run short, leading to plummeting credit scores. SBA financing helps you avoid this trap.

Mid-Construction Financing: Is It Possible?

If you find yourself mid-construction and running out of capital, SBA refinancing is a viable option. While it’s not the easiest route, it is certainly achievable and can save your project from financial jeopardy.

Eligibility Criteria

To refinance with SBA during mid-construction, the debt must be eligible. Typically, short-term notes are considered eligible for refinancing. Each situation is unique, and the specific terms of your existing debt will determine your eligibility.

Avoiding Financial Pitfalls: Planning Ahead

Proper planning can prevent many of the financial issues that arise during construction projects. Here’s why planning ahead with SBA financing is crucial:

Common Issues with Bridge Loans

  • Running Out of Capital: Without enough working capital, projects stall, and borrowers find themselves in a tough spot.
  • Accumulating Debt: Turning to personal credit cards leads to high-interest debt and lower credit scores.
  • Property Loss: In worst-case scenarios, borrowers might have to sell the property short or lose it altogether if they cannot stabilize the asset.

The Advantage of SBA Loans

By considering SBA loans from the start, you integrate all necessary funds into your financing plan, avoiding the need for personal loans and credit card debt. This holistic approach ensures you have the capital needed to see your project through to completion.

How to Get Started with SBA Financing

Getting started with SBA financing requires understanding your unique project needs and finding the right lenders. Here’s a step-by-step approach to help you begin:

Step 1: Assess Your Project

Start by assessing your project in detail. Even if the business you're buying has weak tax returns, dive deep to understand the property and business potential. A well-stabilized property with substantial equity becomes an attractive deal for banks, credit unions, and non-bank SBA lenders.

Step 2: Explore Financing Options

At this stage, it’s beneficial to consult with experts who have strong relationships with a variety of lenders. Alternative programs that resemble SBA might also be a better fit for certain use cases.

Step 3: Consult an Expert

Engage with a consultant like Beau Eckstein, who can provide personalized advice based on your project's specifics. Beau works with banks, credit unions, and non-bank SBA lenders, often without charging a fee. His deep industry knowledge and connections can help you find the best financing solution.

Conclusion: Secure Your Project’s Future

Mid-construction SBA financing can be the lifeline your project needs. By planning ahead, understanding eligibility, and consulting with experts, you can navigate the financial challenges of construction projects smoothly. Don’t let financial hurdles derail your progress—explore SBA financing and secure your project’s future today.


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