Small government guaranteed business loans over $350k with or without real estate security component

Many of our clients believe that $350k is the maximum they can qualify when applying for small government guaranteed business loans. But there are other opportunities to go above $350k and sometimes above $500k. In this article we will discuss what other options are available when the loan amount needed is above the standard $350k. We will discuss what is needed to satisfy financing requirements that are offered by chartered banks and credit unions offering government guaranteed loans.

Many small business loan clients are looking for $250-$350k for renovations, equipment and operating capital needs. Normally if the company requires more than the above amounts in a form of small business loans, they are much bigger than regular small businesses financed by small business programs offered by the banks. But in some cases small businesses do require financing amounts of larger scale. Many doctor’s offices for example often buy equipment that is valued in hundreds of thousands of dollars and their requirement is definitely above $250k-$350k. Many of our manufacturing clients are also purchasing equipment and require large scale construction investments into their facilities that falls into a much higher financing category than small business loans can finance on their own.

When similar situation arises we normally split the financing requirements into several pieces and normally try to find the best possible scenario on how to finance each piece. Very often we design cash flow/operating cap budget that could be sourced outside of small business loan programs and keep it in a second position on corporate security ledger after the small business loan itself. This operating cap/cash flow loans could be as high as 150k and when added to a government guaranteed small business loan the obtained loan amount is $500k without the real estate component. This is a very attractive option for many business owners.

Also when there are related firms involved in the business we can fund the combination of small business loans, reaching the combined loan amount of $600k-$700k. They are guaranteed by 2 separate corporate entities and funded separately in different portions of the total financing requirement.

Now if there is a real estate component that is included in a small business loans application, the total loan amount of the government guaranteed portion could be up to $500k.Although this is a very tough sell to any of the institutions offering such business financing. Technically if the file is strong and a person behind the business has great covenant, this is the limit that could be obtained. Adding extra $150k operating cap loan or cash flow loan on top of $500k brings the combined loan amount to $650k, which is already quite an improvement from industry recognized $350k limit.

There is also an option of factoring the receivables during the time when expansion financing is needed and the firm and their owners cannot wait to assemble of the receivables that are out on the street. Our firm has great experience with this financing option and we factored manufacturing receivables up to $800k per client. At 30%-50% of the contracted receivable amounts, at 2%-4% percent per month for AAA receivable and 5%-8% per month for B type receivables. If we combined factoring amount with a small business loan amount that could go as high as $500k we can get a very substantial financing piece of close to a $1Million or above. This in many cases will be very satisfactory amount, especially for small to medium sized businesses.

Another potential product that could be combined with a small business loan, is operating business line of credit, which we can derive from commercial banks and even some chartered banks. Even though this product is also based on receivables, highly sensitive to inventory sizes and account receivable aging. Many clients can benefit largely from implementing this line of credit alone or combined with a small business loan financing that we can source.

There are numerous options on how to derive higher loan amount for small business clients. We strongly suggest our clients to seek professional advice from one of our associates before undertaking any of these loans to save your time and money!

Happy financing every one!

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