Did you know that this month, the Small Business Administration (SBA) announced that they are no longer accepting applications about requests for an increase of an Economic Injury Disaster Loan (EIDL)?
Even though the SBA ran out of funds for applicants who wished to increase their EIDL, there are other alternatives. Consider other options, such as an SBA working capital loan. According to the SBA, this is the most frequently used loan program.
One of the causes why businesses cease to exist is not having enough capital. Are you looking for an increase in your funds to cover the pandemic’s setbacks? Here is how you can qualify for an SBA working capital loan.
What Is An SBA Working Capital Loan?
You can acquire an SBA working capital loan by applying for a 7(a) loan. This loan is for small businesses that need monetary aid. However, the SBA is not the lender.
The SBA is considered the insurer. Who lends the loan? Among others, lending organizations and banks offer the loan.
However, lenders cannot proceed to give you any funds until it is processed by the SBA. As its name implies, the loan is used as working capital. The maximum amount that can be borrowed is $5 million!
There are multiple types of loans under the 7(a) loan program. You will need a collateral as a requirement for some of these loans, and there are different policies for the loans.
What Are The Types Of 7(A) Loans And Their Benefits?
You can use this loan as short-term working capital, and you can use this loan as long-term working capital. Do you have any debt? This loan can be used to refinance a current debt you owe.
Moreover, you can use this loan to make purchases, such as equipment and real estate. Are you in the process of an acquisition? This loan can also be used for this purpose.
Below are brief descriptions of some loans under the 7(a) loan program.
Standard 7(a)
loan has a cap of 5 million dollars as the amount that you can borrow. If you borrow $350,000 or less, no collateral is needed.
7(a) Small Loan has a cap of $350,000 as the amount that you can borrow and no collateral is needed.
SBA Express loan has a cap of $500,000 as the amount that you can borrow. Unlike the previous two loans, its eligibility is made by the lender, and you will still need to fill out an SBA form.
Export Express loan has a cap of $500,000 as the amount that you can borrow. Eligibility is also made by the lender, and an SBA form has to be filled out as well. The line of credit cannot be more than seven years.
Export Working Capital loan has a cap of 5 million dollars as the amount that you can borrow. The SBA or an authorized lender can decide if you are eligible.
CAPLines loan has four categories: Seasonal CAPLine, Contract CAPLine, Builders CAPLine, and Working CAPLine.
International Trade loan has a cap of 5 million dollars as the amount that you can borrow. The loan maturity varies.
Who Is Eligible?
The SBA uses multiple factors to consider your request. Do you think you might be eligible?
Here are some questions.
How does your business generate income? How is your credit history? Where is your business located?
Here are some of the requirements you must meet to be considered:
- Your business must be categorized as a small business
- Your business is in the United States
- You have an equity investment
- You will use the loan for a business matter
- You must prove that financial help is a necessity
- Your business is not a non-profit
- You are not delinquent on debt
However, not all small businesses will be eligible, such as a non-profit business.
Loan Approval Process
You will need a lender to apply for an SBA working capital loan. Your lender will assist you with selecting a loan. The amount of the loan that you receive depends on the type of 7(a) loan that was selected.
The necessary paperwork will be submitted by your lender for your SBA working capital loan application. This includes multiple documents regarding information about you, your background, and your business.
There will also be questions about your affiliations, loan history, tax returns, and more.
There might be other forms that you might need to fill out, depending on how you will use the funds.
Help For Your Loan Approval
We have experts in commercial real estate, disaster loans, mergers and acquisitions, factoring or asset-based lending, and preschool and daycare matters.
We have a 30-day turnaround time for SBA working capital loans. You must have a minimum credit score of 640.
Let us discuss this topic with you and assist you with the SBA working capital loan approval process. You can find articles on our blog regarding multiple topics, such as SBA loans.
Due to the pandemic, to assist businesses, multiple loan options were created. Browse through our website for the different year terms and rates that we offer. Learn more about other loans available, such as the 504.
Do you need support for your business? Let our experts in corporate finance help you with requesting a loan and navigating through the options. We will help you with creating an optimal strategy to reach your objective.
Contact An Expert
An SBA working capital loan, 7(a) loan program, has multiple multiples types of loans for small businesses to use as working capital. You need a lender to submit the application for you.
Are you wondering about the SBA working capital loan eligibility? Schedule a consultation with us.
Do you have any questions? Give us a call at (954) 434-1296 or send us an e-mail at aeckstein@cscadvisors.net.
Visit our website, and learn more about our services. We have financial experts here to help you. Let us guide through this process of getting your SBA working capital loan approved.
