About SBA Construction Loans

SBA construction loans are a way for small company owners to invest in their enterprises in strategic manners. Everyone knows small business is the primary driver of the U.S. economy, comprising the largest percentage of private employers. To help them grow and benefit their communities, SBA construction loans are often a viable and smart alternative to traditional lending institutions. So, what are SBA construction loans and how do they work?

About SBA Construction Loans

Per Bruce Myles, owner and founder of Proactive Commercial Lending Group, LLC,"a Texas Commercial Lender," As you probably guess, SBA construction loans are Small Business Administration construction loans (though the SBA itself doesn’t actually loan money. Okay, that’s a bit confusing, but it really isn’t.

Think of it this way, the SBA or Small Business Administration, is an entity which helps small companies establish a presence and grow. It does so by providing certain resources. The SBA also establishes certain guidelines for products and services it doesn’t supply directly, but through partnerships.

In other words, a SBA construction loan is a type of debt instrument, named after its creator. While its outside lenders which provide the funds, they must abide by certain guidelines and standards. Those guidelines and standards are catered to small businesses to help them succeed.

SBA Construction Loan Advantages

SBA construction loans are offered for a variety of reasons. Most importantly, because they are intended to benefit small businesses who want to own their own real property.

Owning commercial real estate has several big benefits. Of course, the largest is ownership itself and not being dependent on another party. But, there are other reasons SBA construction loans are advantageous:

●      Customized for small business. SBA construction loans, of course, are tailored to small business. These aren’t one size fits all commercial loans. Instead, these are designed with small business dynamics in mind.
●      Smaller equity injections. Another benefit of SBA construction loans are smaller sized capital or equity injections. (These are somewhat akin to a downpayment). Since these require less money, they are more affordable, overall.
●      Long amortization. SBA construction loans also boost longer rates of amortization. So, it’s possible to obtain a 15-year, 20-year, or even a 25-year loan. This effectively lowers the repayment obligation, helping to free up more cash for other necessary expenses.
●      Startup working capital. It’s also possible to obtain working capital through an SBA construction loan. Which injects cash into the business for various expenses.

Overall, SBA construction loans are a smarter way of financing the building of a commercial property, being catered to the needs of small businesses

Article courtesy of Proactive Lending Group in San Antonio.For help with SBA loans see their website.

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