How to Refinance an SBA Loan Successfully
If your SBA loan is now making it hard to operate your business, you may want to consider refinancing. Learn more about how to refinance an SBA loan.
Is your company growing faster than you can financially keep up with? It might be time to consider SBA lending. Check out these signs.
Book a Consultation Call20% of small businesses in America fail in their first year. A critical contributor to this failure is the lack of adequate funding for operations.
As a small business owner financing can make or break your firm. The government through the Small Business Administration (SBA) seeks to support the growth of small businesses through SBA lending.
The SBA guarantees loans given to entrepreneurs by its partners to reduce the risk of default.
If you are looking to support the growth of your small business here are signs that SBA loans might be what you need.
Small businesses are usually seen as high-risk borrowers by banks and other alternative lenders.
As a result, the interest they charge can at times be higher than those they levy on more mature firms. A high cost of debt ends up making things much more difficult for your company.
As a small business owner, the SBA can help you remedy this situation. Since the government partially backs a lender facilitating an SBA credit facility, they can offer relatively lower rates.
SBA Loan
The 7(a) loan program will be the most suitable option for you when refinancing expensive debt.
When your small business begins to grow there are times when acquiring another existing company can become a viable option.
Through the 7(a) loan program you can get up to $5 million through the SBA’s lending partner to help you expand.
Although you may have begun your business on a small scale, its success can call for expansion of operations.
As a result, you might need to buy significant fixed assets to grow the firm's operational capacity. These assets can include:
If your cost-benefit analysis shows that purchasing a significant asset is better than leasing it the SBA can help you. Its 504/CDC program can lend you up to $20 million for the purchase.
The 504/CDC loan program will involve an SBA-certified Development Company and a bank. Since there's more than one lender involved you may need to fulfill some additional qualification criteria.
Sometimes a small business might be too small or too new for an SBA lending partner to work with due to the low limits. Despite this fact the company might be experiencing robust growth and in need of financing.
SBA's microloan program helps such firms tap into the resources they need for growth. In partnership with non-profit organizations and community lenders, the SBA can finance you up to $50,000.
Since borrowers taking on microloans are still small and not established, they can pose a higher risk. The interest rate will, therefore, be slightly above market.
When a small business experiences tight cyclical cash flow problems it will need some working capital. The SBA helps small firms at various stages to improve their working capital situation to facilitate their multiple needs which can include:
Newly formed companies or those that are too small to work with typical lenders can tap the microloan program. The 7(a) program will help more established small businesses to assess working capital in line with their needs.
The CAPLines of credit program is especially useful for builders and other small firms contracting with the government. They can access it to get money from short term contracts.
If your business requires an SBA loan, you need to find out what the conditions are. SBA funding can take longer than typical small business loans to get approval.
It takes up to 90 days to go from application to getting the funds in your account.
You, therefore, need to know all that will be required of you so that your application doesn't take more time than it has to.
Here are the things you need to fulfill to apply for SBA financing successfully.
Any business that desires to seek SBA financing must be located in the USA or its territories. Besides, its operations must also be in the USA or its territories.
To qualify for any SBA funding your business must be a for-profit one. It should also be officially registered in the USA.
For a business to successfully raise SBA funding its owner must have equity in it. The stake can be in the form of money that the owner has invested or their time.
The SBA requires that any business desiring to approach it for funding first seek alternative capital avenues. Only after it has failed to get funding from other financiers can it make its application.
The SBA will also require your personal background information as the owner of the business.
If you own more than 20%, the SBA’s lending partner might ask you to sign a personal guarantee on loan.
As you prepare to apply for SBA funding ensure you look up the full list of requirements to increase your odds of success.
Keep in mind that as part of the SBA guaranteed loan you will need to sign a personal guarantee. This means that in the event of default, the bank and the SBA will look to you to pay any balance personally. The SBA guarantee provides an incentive for the bank to lend to you, it does not absolve you of liability.
Contact us today for more insights on and SBA loan default and how you may be able to settle your debt with the SBA. Our SBA attorneys are experienced and aggressive and will provide assertive representation.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Our firm successfully resolved an SBA 7a loan in the original amount of $364,000 for a New Jersey-based borrower. The client filed Chapter 7 bankruptcy but the mortgage on his real estate securing the loan remained in place. The available equity amounted to $263,470 and the deficiency equaled $317,886.
We gathered the pertinent documentation and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the mortgage for $80,000.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
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