SBA Loans

New legislation has been passed which will impact SBA loans. Here are some quick details.

  1. PERMANENTLY increases the maximum gross 7(a) loan size to $5 million
  2. PERMANENTLY increases the maximum net 7(a) loan to $3.75 million
  3. TEMPORARILY allows a 90% guarantee on a $5 million loan – so $4.5 million (through 12/31/2010)
  4. TEMPORARILY raises SBA Express maximum loan size to $1 million (for 1-year from date of enactment

Now is a great time to get an SBA loan without all the hefty fees that are normally associated. SBA will typically charge a guarantee of 2-3% of the loan amount as an additional closing cost. This fee will be waived for a temporary period of time. This can present significant savings to a borrower (i.e. a $1,000,000 loan will not be charged the SBA guarantee fee which could range from $20,000-$30,000). Now is the time to get your hands on a small piece of the government stimulus.

The changes mentioned above will encourage lenders to approve more deals. Established business owners who qualify for larger loans and credit lines will benefit from the increased loan amounts under the program. If you have recently been declined for “insufficient collateral” you should revisit your loan request with your lender. The SBA guarantee may be able to mitigate this risk.

Business owners who own storage units are now considered owner occupied real estate. This new classification makes the SBA loan program an option. One major benefit to qualifying for an SBA loan is the loan advance value of 90% compared with a conventional rate of 80%. This means borrowers can unlock more cash in the project.

In summary, now is the time to pursue your options for financing. Let us know if you need an expert to stand behind you.

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