Charles H. Green

How To Properly Apply For An SBA Working Capital Term Loan Working capital has many meanings and definitions depending on the application of funds. For the purpose of this podcast, I will define working capital as capital provided to a business to fund tangible recurring business expenses or capital expenditures. Working Capital For Growth As an SBA Loan Broker, I often receive inquiries from SMB owners for working capital to fund the growth of their business. Their definition of working capital is the transfer of funds from the lender's bank account to their bank account without any strings attached. This is not the definition of working capital. Let's set the record straight. Banks provide working capital to fund specific uses such as the purchase of equipment, furniture, fixtures, tenant improvements and fixed expenses such as rent, utilities, maintenance, and employee wages. Therefore, it is important to understand that in preparing your application to submit to SBA lenders, you will need an itemized list of what we call "Use of Proceeds." Just as it implies, the phrase "use of proceeds" simply means identifying the tangible items the funds will be used for by the borrower. To be crystal clear. When a borrower is requesting working capital for growth, they should not expect the funds to be sent to them without providing a detailed use of proceeds. Working Capital To Acquire a Business When applying for an SBA loan to acquire a business, lenders will nearly always provide working capital to sustain the borrower through the transition of the business. This typically includes working capital to pay up to 90 days of fixed expenses and what I refer to as "free working capital," which means the ability to spend the capital without strings attached. This amount of free working capital is normally small compared to the larger amount used for tangible capital expenditures or recurring fixed expenses. You Are Ready To Apply Now that you know how to properly prepare your application, you can successfully apply for working capital to grow your existing business or successfully transition a newly acquired business. If you liked this content, let's connect on social media: Instagram: ⁠https://lnkd.in/g6bRk62r ⁠ Twitter: ⁠https://lnkd.in/gfT2PZzK⁠ LinkedIn: ⁠https://lnkd.in/grePHU9d⁠ Listen to more episodes 🎧 ▶ https://mysbaloanpro.com ▶ https://mysba.pro/applepod ▶ https://lnkd.in/gqQ36FBb

PYMNTS: Lawmakers Encourage CFPB to Protect Consumer Choice While Rewriting Rule 1033: The chairman and vice chairman of the House Financial Services Committee are encouraging the Consumer Financial Protection Bureau (CFPB) to protect consumer choice and financial data privacy as it writes new rules for open banking. Reps. French Hill of Arkansas and Bill Huizenga of Michigan, the committee’s chairman and vice chairman, respectively, wrote a […] The post Lawmakers Encourage CFPB to Protect Consumer Choice While Rewriting Rule 1033 appeared first on PYMNTS.com. http://dlvr.it/TPPQMl #payments #fintech

SBA 504 Loan Vs 7(A) Loan – 7 Key Differences Explained: When considering financing options for your business, comprehension of the differences between the SBA 504 and 7(a) loans is essential. Each loan serves a unique purpose; for instance, the 504 loan is ideal for acquiring fixed assets, whereas the 7(a) loan offers flexibility for various business needs. Their structures, amounts, interest rates, and eligibility criteria likewise differ markedly. Knowing these distinctions can help you make an informed decision about which loan aligns best with your financial goals. Key Takeaways * Purpose: SBA 504 loans are for long-term fixed asset acquisition, while SBA 7(a) loans cater to immediate working capital and various business needs. * Structure: SBA 504 loans involve multiple parties (lender, CDC, borrower), whereas SBA 7(a) loans are processed as a single loan from an approved lender. * Loan Amounts: SBA 504 loans range from $250,000 to $30 million, while SBA 7(a) loans have a maximum limit of $5 million. * Interest Rates: SBA 504 loans feature fixed rates tied to U.S. Treasury bonds, while SBA 7(a) loans can have variable rates based on prime interest. * Eligibility: SBA 504 loans require specific net worth and income criteria, whereas SBA 7(a) loans focus on operating for profit and meeting SBA size standards. Purpose of the Loans When you’re considering financing options for your business, grasping the purpose of different loans can greatly influence your decision-making. The SBA 504 loan is customized for acquiring or improving long-term fixed assets like commercial real estate and heavy equipment, promoting business growth and job creation. Conversely, the SBA 7(a) loan offers greater versatility, allowing you to use funds for various purposes, such as working capital, debt refinancing, or purchasing inventory. While the SBA 504 loan encourages infrastructure investment and requires you to meet job creation goals, the SBA 7(a) loan has no such requirements. Comprehending the distinct purposes of the SBA 504 vs SBA 7a loans can help you choose the right financing option for your business needs. Loan Structure Comprehending the loan structure is crucial when deciding between an SBA 504 and a 7(a) loan. The SBA 504 loan involves three parties: a conventional lender covering 50% of financing, a Certified Development Company (CDC) providing 40%, and you, the borrower, contributing a 10% down payment. This multi-part structure helps minimize lender risk and offers longer repayment terms. Conversely, the SBA 7(a) loan is a single loan from an SBA-approved lender, streamlining the application process without a CDC. Whereas the 504 loan may take 60 to 90 days to process as a result of its complexity, the 7(a) loan typically gets processed faster, usually within 30 to 60 days, making it more convenient for immediate funding… http://dlvr.it/TR2GN1

Many small businesses assume affordable financing is out of reach. But SBA 7(a) loans remain one of the best funding options available for entrepreneurs looking for: ✔ Lower interest rates ✔ Longer repayment terms ✔ Flexible capital for growth, equipment, or working capital If you’re exploring cost-effective funding for your business, this guide explains how SBA 7(a) loans work and how to qualify. 📖 Read the full guide here: https://tr.ee/3MBwRq #SmallBusinessFunding #SBALoans #Entrepreneurship #BusinessGrowth #StartupFunding #BusinessFinance