Seeking Business Loans for Expansion Plans? Consider the SBA
March 27, 2024
As your small business grows, you may have the opportunity to expand by opening a new location, hiring more staff, or investing in larger, more efficient equipment. Although the possibility of business growth can be exciting, covering the cost may pose a challenge.
If your expansion plans depend on having reliable and strategic financing, consider using Small Business Administration (SBA) loan programs to secure the small business loans your Texas business needs.
Learn about SBA business loans for expansion needs, the different types of SBA loans to choose from, and why Texas Gulf Bank is the experienced SBA loan lender you need for your business growth.
How SBA Loans Support Small Businesses
The Small Business Administration (SBA) is a federal agency that supports small business growth and job creation by providing a loan guarantee on a portion of the loan to established small business owners, allowing banks to offer funding to a wider range of small businesses. Because the federal government backs these small business loans, it gives banks the ability to offer bank loans to a wider range of small businesses.
By making this funding accessible, the SBA helps empower business owners to expand their operations, invest in infrastructure, and hire more employees. Owners have the resources to boost the company’s growth and prepare for future expansion opportunities.
SBA loans may provide a much-needed spark for small businesses aiming to grow and create new opportunities. But, which SBA financing options are best suited for your needs? Let’s review the available lending options.
Business Loans for Expansion: SBA Financing Options
The SBA offers multiple loan programs tailored to meet the diverse needs of small businesses across various industries. The two most popular options are the SBA 7(a) and SBA 504 loans.
SBA 7(a) Loans
The SBA 7(a) loan is a versatile loan option that provides the funding needed for a wide range of common business needs and investments during an expansion period.
Borrowing businesses may use SBA 7(a) funds to cover certain expenses, including:
- Purchase building for your business
- Machinery and new equipment financing
- Inventory purchases
- Furniture, fixtures, and office supplies
- Marketing and ad campaigns
- Recruiting and hiring costs
- Refinancing existing business debts
These expansion loans typically offer flexible terms that may help small business owners conserve available cash resources for other key business operations. Businesses that choose SBA 7(a) loans may also be able to improve cash flow while having the working capital needed for expansion.
SBA 504 Loans
For businesses that need financing to cover major fixed-asset purchases during an expansion, the SBA 504 loan is a good option. The SBA 504 loan program is ideal for small businesses that want to expand their business by buying commercial real estate, constructing new facilities, acquiring an existing business site, or renovating their current property.
SBA 504 loans are typically not short-term loans to cover working capital expenditures (e.g. covering payroll). They are intended for major purchases such as:
- Commercial land and building (owner-occupied) purchases
- New building construction
- Renovations or upgrades on existing property
- Large-scale machinery and heavy equipment
- Land improvements for roadways, parking, or utilities
- Debt refinancing
Advantages of SBA Loans for Business Expansion
Small businesses have various options to choose from when considering how to pay for upcoming business expansion plans, such as using cash reserves, applying for business grants, or relying on business lines of credit.
Although any of these choices could help cover some expansion expenses, SBA-backed financing may enable small businesses to access the financial resources needed to cover nearly all costs associated with expansion plans.
SBA loans may create several distinct advantages for your business in comparison to other types of funding options.
Improved Cash Flow
One of the challenges small businesses face when considering expansion is how it could impact cash flow. With SBA loans, businesses potentially have the funds needed to cover major purchases or construction costs while also having the cash on hand to cover day-to-day operational expenses like payroll or rent.
Favorable Terms
The SBA 7(a) and SBA 504 loans frequently offer favorable loan repayment terms designed to support the needs of small businesses. Some of the potential advantages may include lower down payment requirements, higher loan limits, and longer repayment periods compared to other financing options.
Fund Flexibility
SBA loan proceeds offer small business owners valuable flexibility in utilizing their loan funds to achieve their expansion plans or business goals.
SBA 7(a) funding can be used for a wide range of business needs, while SBA 504 loans enable businesses to make the large purchases needed for sustained growth during an expansion period.
Applying For SBA Loans at Texas Gulf Bank
At Texas Gulf Bank, we prioritize supporting Texas small businesses, and we have been a leading provider of financing solutions throughout the Southeast Texas Gulf Coast region for over 110 years.
We understand that expanding your small business is a significant undertaking, but with the support of SBA loans, it may become a realistic and attainable goal. We have extensive experience in helping small businesses navigate the SBA loan process, with a dedicated SBA loan specialist ready to help each step of the way.
To get started with our bank, the SBA loan application process begins with an initial assessment to determine if your business is eligible for SBA financing. Any business interested in applying for SBA loans must first meet these basic SBA business requirements.
Business Type
Most business types are eligible, but they must be owner-operated, for-profit entities located in the U.S. Certain businesses are not eligible for SBA loans, such as investment, lending, speculative, and gambling-related companies.
Business Size
SBA loans are only eligible for “small businesses” as defined by the federal government. The requirements vary by industry and/or net worth and net income. For a complete list of size requirements by industry, consult the SBA eligibility requirements on the SBA website.
Financial and Business History
SBA loan applicants must meet minimum financial and background standards such as personal and business credit, historical and/or projected revenues, equity in the business, net income, cash flow, criminal history, and education and/or work experience.
If your business meets the eligibility requirements to apply for an SBA loan to expand your business, Texas Gulf Bank can help you gather and prepare the required business and financial documentation as part of the application process.
Our SBA loan experience and insight may help you enjoy a seamless loan experience throughout the lending process.
SBA Loans: Contact Us to Get Started
An expansion period for any small business can be exciting yet challenging. It helps to have a financing partner in your corner, ready to help you navigate new territory.
When you are ready to get started on business loans for expansion, get in touch with our bank to discuss the application process.
To get started, contact Texas Gulf Bank today at 1-800-467-7216, via email at sbaloans@texasgulfbank.com, or by visiting one of our many local banking centers. You can also complete our contact form to let us know your interest.– If you have SBA financing or business loan questions or want to learn more about our commercial loan options, consider subscribing to our email newsletter. We provide regular updates on business financing solutions so you always stay up-to-date on the options to grow your business.
All loans subject to credit approval.