SBA Changes: What You Need to Know for Small Business Success

In the ever-evolving landscape of small business financing, staying informed about the latest changes can make all the difference in securing the capital your business needs to thrive. The Small Business Administration (SBA) has recently introduced several significant updates to its lending solutions, offering innovative solutions for small business owners. These changes promise faster turn times and simpler applications, which can be greatly beneficial to your business's financial journey. We are proud to be designated by the SBA as a Preferred Lender.

Faster Turn Times and Simpler Applications

The SBA has been working to streamline its application processes. The promise of faster turn times and simpler applications is on the horizon, offering hope for small business owners navigating the often complex world of loans and financing.

Partial Change of Ownership Financing

One of the notable changes is the SBA's willingness to allow the Bank to finance a partial change of ownership. This means that non-owners looking to acquire a portion of the business or current owners seeking to buy out others now have more flexible financing options at their disposal, a positive step toward facilitating business transitions and growth.

Greater Debt Refinancing Authority

The SBA has expanded its authority to refinance business debt. Now, eligible debts can include government-guaranteed loans, the Bank’s loans, and even loans from other banks. To qualify, the new loan payments must be at least 10% lower than the current payments, and the original loan usage must meet certain eligibility criteria. This offers businesses more avenues to resolve financial challenges.

No Stated Equity Requirements for Startups

Startups have reason to celebrate as the SBA has eliminated stated equity requirements. Additionally, the definition of equity has been broadened when financing a change of ownership. Seller notes with deferred payments or interest-only structures can now count toward the equity injection, easing the financing process for many businesses.

No Liquidity Restrictions

Previously, SBA loans came with restrictions on the liquidity of business owners. Now, those with significant cash reserves and marketable securities can explore SBA financing options, making it more accessible for a wider range of entrepreneurs.

Staying informed and working closely with experienced advisors can help you make the most of these changes while navigating the evolving small business financing landscape. We encourage you to contact one of our experts to walk you through your options and ensure that you are on a path towards success.