No two entrepreneurs have the same needs. Some need equipment. Others need a good base of operations or simple working capital to sustain and grow operations. In most cases, SBA loans are a good fit, wit the SBA 7a and SBA 504 loan programs covering the needs of most businesses. But what are the differences between the two programs and how are they used?
SBA 7a Loans
Among SBA loans, the 7a program is one of the most popular due to its versatility. SBA 7a loans help businesses with working capital, equipment, inventory, and even commercial real estate. For emerging entrepreneurs, SBA 7a loans can provide startup capital. Businesses that are positioned for growth can use these SBA loans for mergers and acquisitions. The guidelines set by the Small Business Administration for the 7a loan program offer up to $5 million for entrepreneurs in practically every industry.
SBA 504 Loans
While SBA 504 loans seem similar to the 7a program, there are some major differences. These SBA loans are more focused on commercial real estate, equipment, construction, and large business assets. SBA 504 loans can be used to purchase property for your business or to make improvements and expand existing structures. For these reasons, SBA 504 loans are popular among franchise owners. Additionally, SBA 504 loans can be used to acquire equipment, machinery, vehicles, and other large business assets. For commercial real estate investors, SBA 504 loans can provide capital for property purchases with the caveat that they are used as owner-occupied properties. Because these SBA loans deal with major acquisitions, they offer up to $20 million to entrepreneurs.
Applying for SBA Loans
While many lenders offer SBA loans, not all lenders handle applications the same way. Traditional lending channels use a “chain of command” process, where SBA loan applications are passed between departments – and sometimes between different branches – before a decision is made. This can cause long processing times and the amounts offered are sometimes lower than expected. Fortunately, there are other alternatives.
Fast and Efficient SBA Loan Approvals
At Nanaki Capital, we handle all SBA loan applications in-house, which greatly reduces processing and approval times. We understand that entrepreneurs operate on time-sensitive schedules, so we fast-track SBA loans so our clients can access the funding they need quickly. To learn more about our SBA loan programs, contact the team at Nanaki Capital today.