Seeking a Business Loan for a New LLC? Consider an SBA Loan

December 19, 2022

Starting your own Limited Liability Company (LLC) may be the beginning of exciting opportunities in the business world. Still, securing the funding needed to cover daily operations and necessary business expenses can take time and effort.

If you have a new LLC business venture – or if you own a growing business with big expansion plans – you need business financing solutions that will provide you with funds for key purposes:

  • Real estate transactions
  • Inventory acquisitions
  • Equipment purchases
  • Building expansions
  • Other relevant startup costs

The Small Business Administration (SBA) could be your best resource. The SBA is a federal agency that partners with banks to financially back business loans to small business owners in need of strategic and effective lending solutions.

Learn more about a business loan for new LLC purposes, how new LLCs can benefit from choosing SBA loans, and why Texas Gulf Bank is the best choice to help with an SBA business loan.

Businesses That Benefit from SBA Loans

The primary function of the SBA is to help small businesses access the financial resources needed to build and grow their companies, resulting in a more robust economy and new jobs.

SBA loans are available to businesses that meet the following eligibility requirements:

  • Operate as a for-profit business
  • Do business in the United States and/or its territories
  • Provide owner equity for investment
  • Have a feasible business plan detailing specific uses for funds
  • Utilize alternative financing such as personal assets prior to applying for SBA loans

SBA-guaranteed loans are a popular choice for LLCs for multiple reasons. They typically offer several distinct benefits compared to other types of traditional lending benefits such as smaller down payments and favorable collateral requirements.

Also, newer LLCs might not qualify for other financing resources, such as a business line of credit or traditional business loan, but may be eligible for SBA loans.

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Industries most likely to benefit from SBA loans include:

  • Healthcare
  • Manufacturing
  • Engineers and contractors
  • Retail
  • Restaurants
  • Hospitality
  • Wholesale or distribution businesses
  • Childcare and schools
  • Personal care providers
  • Veterinary services
  • Attorneys and law firms
  • Automotive repair
  • Assisted living facilities
  • Accounting services

When you choose SBA-backed funding for your financing needs, you can access LLC bank loans that will make a difference in helping get your new business off the ground and potentially on the path of long-term success.

SBA Business Loan for New LLC: Your Options

Two primary SBA loan options are available for LLCs and other small businesses in need of financing: the SBA 7(a) loan and SBA 504 loan. Each has specific ways funds can be used, and they offer different loan terms and loan limits.

– SBA 7(a) loan: SBA 7(a) loans are the most common type of SBA loan as they are primarily used for funding working capital and other business-critical expenses.

Applicants may be approved for loan amounts as much as $5 million with loan terms of up to 10 years for equipment, leasehold improvements or working capital and up to 25 years for real estate, often with a variable interest rate and a minimum down payment as low as 10%.

Funds from SBA 7(a) loans may be used for:

  • Real Estate owner-occupied facilities
  • Startup costs
  • Business inventory
  • Building repairs
  • Furniture and fixtures
  • Office equipment
  • Marketing expenses
  • Business purchase, construction, expansions, renovations and refinancing of the same

The versatility of SBA 7(a) loans and their wide range of uses for approved funds make them a popular choice among LLCs that need a steady cash flow while they execute their business plan.

– SBA 504 loan: The SBA 504 loan differs from the SBA 7(a) in that it involves two simultaneous loans which together can total up to 90% of the total project costs. One loan is made by a lending bank on a conventional basis and the other is the SBA loan. SBA 504 funds are primarily intended for use on equipment purchases and real estate facilities, and not for working capital purposes.

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Borrowers work in conjunction with a lending bank and a local Certified Development Company (CDC) for approval and servicing of loans. An SBA 504 loan may be approved for as much as $5 million with a fixed interest rate, a minimum down payment as low as 10%, and loan terms of up to 25 years for commercial real estate and up to 10 years for business equipment. When combined with the bank’s conventional loan, the two loans together can be for amounts of $10 million or more for projects.

SBA 504 loan funds can be used to pay for long-term fixed assets such as:

  • Land for new building construction
  • Commercial buildings
  • New construction
  • Machinery and equipment
  • Building renovations
  • Parking lots or garages
  • Utility improvements
  • Refinancing existing eligible real estate debts

New LLCs can choose to apply for either SBA loan option. Or, you may consider applying for both loans depending on your business needs and growth opportunities.

The SBA Loan Application Process

Applying for an SBA-backed loan begins with an initial assessment to determine loan viability and business qualifications. New LLCs interested in applying for SBA 7(a) and/or SBA 504 loans should be able to demonstrate the following:

  • Principal owners with relevant industry experience
  • Reasonable and well-supported business plans
  • Secondary source(s) of cash flow (separate from the new LLC)
  • Equity dollars from principal owners
  • Good borrower liquidity after the equity injection into the new project

To expedite the application process, potential borrowers should be well-prepared to apply for an SBA commercial construction loan. To satisfy each requirement of the business loan, you will be required to provide financial documentation including but not limited to:

  • Completed business loan application
  • Detailed business plan
  • Business financial statements
  • Business tax returns
  • Business debt schedule and full listing of assets
  • Monthly cash flow projections
  • Personal financial statements for each guarantor or owner with 20% or more ownership
  • Personal tax returns
  • Legal entity documentation
  • Real Estate documentation including builder contracts, construction plans and building schedule
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It is essential to have all needed documentation gathered and prepared in advance of your application to ensure a smooth loan application process. Having proper documentation can help prevent lengthy delays that may impact the approval and funding of the SBA loan.

When you go through our bank, our team will be with you every step of the way to help you navigate the loan review and approval process.

Partner with Texas Gulf Bank for SBA Loans

As a community-based local bank, Texas Gulf Bank prioritizes partnering with small businesses to provide reliable and strategic funding solutions. With over 110 years of banking experience, we have in-depth knowledge of the local market and can help guide you as you build and expand your business toward future growth.

When partnering with Texas Gulf Bank for your SBA loan needs, you can expect to receive:

  • Professional and personal attention
  • Access to skillful loan officers with extensive experience in SBA loans
  • Competitive loan terms
  • Creative lending solutions
  • Typically, fast decisions on completed loan application packages

We have helped many small businesses secure SBA loans and meet their business funding needs.

If you need a business loan for new LLC purposes and are ready to apply for an SBA loan, contact Texas Gulf Bank today. We can be reached at 1-800-467-7216, via email at [email protected], or by visiting one of our many local banking centers.

You can also complete the form above to be connected with one of our helpful lenders. We look forward to supporting your new business venture.

All Loans Subject to Credit Approval