Are you a business owner? If so, you should be proud of your accomplishment of starting and running a successful business! Doing this in today's economy can be one of the most challenging things in life. That being said, our bank at the Lake of the Ozarks is here to give you some valuable information on loan types for your business you may find beneficial, in this week's blog. If you have any questions, please do not hesitate to call our SBA loan specialists at First Bank of the Lake today!
SBA 7(a) vs. 504: Which is Right for You?
Trying to decide what type of loan is best for your business can be confusing.
With all the rules, guidelines and regulations, it’s easy to get overwhelmed. But with the right information, you can confidently choose the best loan program for your specific business needs.
At First Bank of the Lake, we are proud to offer government-guaranteed Small Business Administration (SBA) 7(a) and 504 loans.
When should you consider the SBA 7(a) loan?
The 7(a) loan is the SBA’s most popular loan program for small business owners and many who would not otherwise qualify for a conventional small business loan find that they qualify for the SBA 7(a) program. While many people mistakenly think that this loan is only for those starting a new business, the SBA 7(a) loan is also an excellent financing tool for those who want to expand an established business, buy an existing business, purchase a building, or finance a construction project.
When should you consider the SBA 504 loan?
Unlike the 7(a) loans, the SBA 504 loan program is more specific in terms of what you can use the funding for. Created by the SBA to support and encourage small business growth, the funds from this loan must be allocated toward fixed assets such as commercial real estate and equipment. These loans have low down payments and interest rates.
If you’re purchasing an existing building, expanding or building a new construction, the SBA 504 loan allows business owners to finance construction costs, closing costs and soft costs, including architectural fees, engineering, fees, surveys, title insurance and more within the loan. Machinery, equipment, furniture, fixtures, signage, landscaping and parking lots and equipment can also be included. This allows borrowers to retain more of their working capital for other expenses.
If you’re unsure which program would be best for your business, remember that you do not need to go through this process alone.
Contact an experienced SBA Preferred Lender like First Bank of the Lake to discuss your options. We are here for you and we put YOU first! You can also learn more about this process by visiting our website HERE. Be sure to follow us on our social media channels listed below to stay up to date on our latest announcements and the newest products we offer that your business can benefit from.
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