Financing a Start-Up with an SBA 7(a) Loan

The Small Business Administration (SBA) has been making loans to help out small start-up companies for decades.

Being a start-up sometimes means facing money shortages and funding challenges. That’s why the Small Business Administration (SBA) has been making loans to help out small start-up companies for decades. The most common loan guaranteed through the SBA for companies in the start-up phase is the SBA 7(a) loan. 

SBA 7(a) loans don’t come directly from the SBA, but they guarantee a portion of the balance which reduces the risk to banks that are willing to make these loans. This, in turn, makes it easier for your business to get approval with lower credit and financial standards. It’s a HUGE win for everybody because start-ups often face some fierce financial challenges!

What Start-up Costs can I use the SBA 7(A) Loan for?

The SBA 7(a) loan can be used for a surprisingly wide range of start-up costs, many that you may not have even realized you could use a hand with. Along with buying merchandise and paying employees, you can also finance these items in many cases:

  • Land. Now, to be clear, you can’t buy investment land and sit on it; this land has to be the future home of some aspect of your business. But, whether it’s the new warehouse or the new HQ, you can finance it with your SBA 7(a) loan. You can also wrap construction costs into that package.

  • Existing debt. If your existing debt is becoming a crushing mountain of bills, the SBA 7(a) loan can help you tame it. Instead of 15 payments, you’ll have one—and it’ll have a lower interest rate and a longer-term, and the check will be much easier to cut.

  • New equipment or furniture. Whether you need a conveyor system or a cubicle farm, your SBA 7(a) loan is ready and waiting for you. Maybe one of each?