An article published recently by many of the American Business Journals addressed the current state of the SBA and what their extension until February 2nd will mean for the agency. (You can find the link to this article below). One of the biggest issues addressed was the SBA’s 7(a) Program, a government subsidized program that always seems to be having budget issues.
As obvious proponents of the 504 Loan Program, we contend that using 7(a)’s for commercial real estate purchases is ill-advised, since 504 Loans have lower fees and below market, fixed interest rates. We’d rather leave 7(a) loans for working capital purposes, and therefore free up more capital for the program and make it less of a drain on the administration’s coffers.
Not everyone agrees however, since most lenders stand to make more money off 7(a) loans than 504 loans. Compared to both the 7(a) Program as well as conventional lending options, 504 Loans are more often than not, the most beneficial avenue for small to mid-sized business owners. Many very bankable companies are now realizing that with the 504, they can preserve their capital and maximize their cash flow, achieving the highest cash-on-cash return financing available on the market today. As the program becomes more widely well known in the market place, it will grow exponentially. For now, we just hope that the 7(a) Program’s inefficiencies don’t give a bad name to the SBA’s highly successful 504 Loan Program.
Read the original story: >Slim Pickings for Small Businesses in U.S. Congress
Please post and let us know if YOU agree . . .