If you own a small business, it is highly likely your business would benefit from additional working capital. Whether you are growing or are still recovering from the economic impact of the pandemic, it can be helpful to understand funding options.

The Small Business Association (SBA) wants to help small businesses succeed and grow by offering terms that are more enticing than traditional loans. During the pandemic, the SBA rolled out the Paycheck Protection Program (PPP), which ended on May 31, 2021.

However, the SBA still has many extremely beneficial lending programs. Also, there are expanded SBA loan perks for small businesses that can get their applications processed before September 30, 2021.

Apply Now to Save Big

SBA's normally excellent loan terms are currently even better with these limited-time bonuses. Thanks to the CARES Act, guarantee fees are waived on new loans through September 30th. Potential savings are significant since those fees could run up to 3.5% of the guaranteed loan amount, depending on the size of the loan. Additionally, the SBA will pay your principal and interest payments up to $9000 a month for 3-6 months, depending on your loan circumstances.

“No matter how big or small your loan is, it can have a tremendous effect on the future of your business,” says Erica Slatt, SBA Commercial Relationship Manager at First Fed. “Right now, the program is even more attractive with the waived guarantee fees and covered payments on loans approved and fully disbursed by September 30.”

The catch to taking advantage of these great terms is that the loan must be processed and disbursed before September 30, so applying during the next few weeks is essential.

The SBA has also improved your odds of getting approved by increasing the guarantee to lenders to 90%. This means lenders are more willing to consider traditionally riskier loans. However, you still need to have strong balance sheets and a solid business plan to strengthen your application.

What Can You Do with an SBA Loan?

While there are many loan programs under the SBA, the two most popular programs, 7(a) and 504, cover most typical business circumstances.

Designed to support growth, 7(a) loans infuse businesses with working capital up to $5 million. With an 7(a) loan you can use the money to hire more employees, increase inventory, purchase real estate or equipment, or refinance debt. You can even use a 7(a) SBA loan to start or acquire a new business. A 10-year repayment period offers breathing room and flexibility for your company as you grow your revenue.

More limited in scope, 504 loans allow businesses to renovate or purchase owner-occupied real estate or long-term equipment. Unlike the 7(a), it does not allow loans for the purpose of working capital or refinancing debt. But this loan offers lower interest rates for longer terms, up to 25 years. With many conventional loans offering only 5-year terms, this is a huge benefit for many businesses.

Pick the Right Lender

Applying to government programs can seem overwhelming. Working with a preferred SBA lender can take stress and confusion out of the application process. The best lenders will work hand in hand with you throughout the process, identifying potential pitfalls and helping you strengthen your application.

“Working with a bank that has both the expertise and commitment as an SBA lender is essential,” says Jason Gill, Senior Relationship Manager at First Fed with extensive SBA experience. “There is an enormous number of compliance regulations to work through, so make sure your lender has dedicated SBA loan experts that understand local industry and can streamline the process.”

Experienced lenders evaluate the strength of applications based on the industry, business plan and financial projections, among other details. This is where the importance of understanding local industry comes in, to help assess the business proposal within the market, and in turn the chances of a successful loan application.

Success Stories

For one aspirational restaurant , the SBA loan criteria allowed him to qualify for a loan when he might normally be turned down. Because both he and his family had extensive restaurant experience and prepared a solid business plan to support their new venture, he was able to use an SBA loan to acquire an existing restaurant. Now as the new restaurant owner, he will be improving the menu, creating new jobs, and growing revenue.

Another local Washington business needed an infusion of working capital to be able to handle increased boat building contracts. Without a loan they were in danger of running out of money before they could finish the boats they had been contracted to build. The SBA loan gave them the 10-year term they needed to complete the boats and collect the revenue from them to repay the debt. In doing this they also were able to expand their operations and increase their overall profitability.

Go, Grow Your Business

Still have questions? This is where talking to an experienced lender comes in. If your business could use a post-pandemic boost, don’t hesitate to reach out to lenders, ask questions, and get the process started.

“The most rewarding part of my job is helping our clients springboard their businesses to the next level,” added Slatt. “If you are a business owner, we’d love to help you take advantage of all that SBA loans have to offer.”

Whatever the aspirations of your small business, time is running out to take advantage of terms that could end up saving you thousands of dollars. For small business investments, the time is now.

Ready to discuss your options? Set up a consultation with Erica, Jason, and other experts from First Fed, member FDIC