Good News on the Funding Front: The SBA Changes the Math

A couple of weeks ago, the SBA snuck out an announcement that you may have missed. It seems eligible businesses can now borrow up to $10 million by combining the agency's 7(a) and 504 loan programs.

It's been about 16 years since the SBA last adjusted those combined borrowing limits, so this is a pretty big deal. Under the previous policy, using one program reduced the amount available through the other, effectively capping the combined total at $5 million.

Qualified businesses can now borrow up to $5 million through each program. That could create new opportunities for:

• Fast-growth companies with big upfront costs and strong revenue potential.

• Manufacturers, construction firms and other companies that have to invest in expensive equipment, property or facilities.

• Founders buying an established company along with its building, equipment or other major assets.

Of course, most small businesses won't need $10 million. In fact, SCORE says 42% of entrepreneurs started their companies with less than $5,000 in cash reserves. So this isn't a signal to go out and bury yourself in debt. It's another financing option for companies that have outgrown the previous limits or are planning a major expansion, acquisition or capital investment.

In today's lending environment, having another option isn't a bad thing.

Read the rest of the story here: Small Businesses Now Eligible for $10 Million in SBA Financing