You and I both know that the SBA is a helpful resource for small businesses. Many, many business owners have gotten a financial “hand-up” from this government agency, and these small businesses have long been the “backbone of the American economy” (pardon the cliché, but it’s true).
Despite the benefits of the SBA’s loan programs, it can do MUCH better. It needs to do better for the sake of our country’s small businesses and our overall economy. As I’ve explained before, there’s some overlap between the SBA 7(a) loan program and the SBA 504 loan program that is NOT helpful, and is actually downright wasteful. Watch the video below to hear my full argument and see if you agree:
Full disclosure: I specialize in the 504 loan (aka our SmartChoice® Commercial Loan). But that doesn’t mean that I oppose the use of 7(a)s at all…under the correct circumstances. You can do things with a 7(a) loan you can’t with a 504 (working capital and business acquisitions, for example), and these loans are necessary to help small business owners grow and succeed. When it comes to owner-occupied commercial real estate, however, choosing a below-market, fixed-rate 504 loan over a floating-rate 7(a) loan is a no-brainer.
The 504 loan was designed specifically for this purpose (financing commercial real estate and equipment), and gives small business owners the benefits of long-term, below-market, fixed-rate financing with as little as 10% down. 7(a)s typically have variable rates (not good for keeping monthly expenses low) and require much more collateral to be pledged. Plus, as I mentioned in the video, billions of SBA 504 loan dollars go unused every year while the 7(a) program is regularly in need of additional “allocations.” I believe we can make better use of these monies by finally drawing a clear distinction between these two great loan programs, and we’ll help more small business owners in the process.
Whether you agree with me or not, I want to hear what you think. Lively debate is one of the reasons I started this blog in the first place. I love hearing well-thought-out arguments and responses from our readers, so have at it. Leave a comment below or email me at ChrisHurn@MercantileCC.com to add your voice to the debate.
Thanks in advance for commenting and for sharing this blog with someone you know. And DO share it…if we want our government to work more efficiently, then it’s incumbent upon people like you and me to expose issues and present solutions.
Dedicated to Your Continued Success,
P.P.S. You can even connect with me on Google+…