New stimulus bill & SBA Loans

[Cooper Raines]

When I first saw this, I believed it to be to good to be true. Included in the new stimulus is a clause that has been enhanced since the last stimulus. The long and short of it is that the government will pay for a portion of your debt, up to six months of principle and interest payments on new and existing SBA loans. The Section 7(a) and 504 microloans in particular.

Borrowers who take out new loans before October 1, 2021 will receive the first six months of principal and interest payments from SBA. All payments provided for in the new stimulus law will be capped at $9,000 a month

I am not a lender so I will not dive into the particular of the loans, but they seem to cast a pretty wide net as far as what they can be used for. Here are some details taken directly for the SBA's website -

The use of proceeds from 504 Loans must be used for fixed assets (and certain soft costs), including:

• -The purchase of existing buildings;
• -The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping;
• -The construction of new facilities or modernizing, renovating or converting existing facilities;
• -The purchase of long-term machinery* ; or
• -The refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment*.

The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:

• Short- and long-term working capital
• Refinance current business debt
• Purchase furniture, fixtures, and supplies

The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.

There are obviously eligibility requirements that you will have to meet however I think this could be a very good deal for those looking for real estate financing options.