SBA 7a Loans Now Allow More Cash Out

In the past the SBA 7a loans were not friendly to the idea of pulling cash out. If the borrower was pulling cash out, they needed to reinvest is all back into the company via working capital, improvements to their building, etc... They were also very limited in how much they were able to pull out. With recent changes and amendments to the SBA guidelines, borrowers are able to pull out more money and they have more control on what they can use that cash for.

With the recent changes, small business owners must use 51% of their loan proceeds to pay off their existing loan. If their loan includes a prepayment penalty when they refinance, this can be included in the 51% allowing the borrower to pull out more money to cover that prepayment penalty. This means that 49% of the loan proceeds may go towards something other than paying off the current note.

There have been many small businesses who have been affected by the real estate market and deterioration of our economy. Many small businesses can survive the downturn if they are able to pull some equity out of their buildings short-term to purchase more inventory, use as working capital, expand, etc... These new amendments give them the flexibility to make changes that their business needs to survive.

If your business needs a little cash to keep the doors open or to be able to adapt in these tough times, the SBA 7a loan is a great place to start.