A Compelling Opportunity Brought About by The Cares Act.
While the Payroll Protection Act has recently drawn the attention of most small business owners and their bankers, many people have missed another very compelling opportunity brought about by the CARES Act. The SBA will be making six monthly payments of principal and interest for all current borrowers under the SBA 7(a), 504, and Microloan programs. Additionally, the SBA has now extended that payment plan to any new borrower under one of those programs who receives funding for their loan prior to September 27, 2020.
So, if business owners are exploring the purchase of a business, equipment, real estate, or other assets, the SBA has just made it less expensive to do so. But business owners shouldn’t delay in making a decision to pursue a new loan. These loans are issued by banks and partially guaranteed by the SBA if the bank does everything perfectly during the underwriting and loan process. With all the hoops that a borrower has to jump through, the process isn’t fast. If business owners want to take advantage of this program they need to pursue the loan immediately.
Following are a few high-level facts to know about SBA 7(a) and 504 guaranteed loans:
Loan Type | 7(a) Loan Maturity | 504 Loan Maturity |
Business Application | 10 | Not Applicable |
Real Estate | 25 | 20 - 25 |
Equipment | 10 | 10 |
Working Capital & Inventory | 10 | Not Appilcable |
Personal guarantees are required on both types of loans.
If you have further questions about the SBA loan programs or need assistance preparing for the loan or finding the best lender, please contact one of the financial professionals at Waypoint Private Capital.