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  • Writer's pictureViking Advisory Group

How to Use Financing to Help Your Business Prosper

More than ever, business owners are reviewing their processes, making unfamiliar changes to operations, and even reaching out virtually to remain in contact with clients and customers. There are other not so obvious strategies that businesses can employ to increase cash flow and promote greater flexibility.

Interest rates are currently at historic lows and make borrowing, from both banks and private sources, an attractive option to access additional working capital for operations or funds for expansion of the business.

For our clients, here are three of the more popular financing options:

1. SBA 504 Loan

The use of proceeds from 504 Loans must be used for fixed assets (and certain soft costs), including:

  • The purchase of existing buildings

  • The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping

  • The construction of new facilities or modernizing, renovating, or converting existing facilities

  • The purchase of long-term machinery

  • The refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment

504 Loans are typically structured with SBA providing 40% of total project costs, a participating lender covering up to 50% of the total project costs and the borrower contributing 10% of the project costs.

2. SBA 7(a) Loans

  • Loans up to $5,000,000

  • SBA guaranty for 75% (85% for loans up to $150,000)

Unlike the 504 Loan, the 7 (a) Guaranty Loan can be used for most business needs.

3. Working Capital (Conventional)

  • Term of 1-3 years, can be renewed

  • Interest only

  • A/R and inventory are used as collateral

  • The borrowing base is typically calculated from 80% of A/R and 50% of Inventory

More than ever, it is incumbent for small businesses to utilize all tools available to facilitate growth and stability.The experts at Viking can partner with you and help match your business with the correct product to facilitate increased growth and profitability. The Viking team has placed over $100,000,000 of loans for our clients and are confident that we can help you as well. For assistance in navigating the loan process or any questions related to financing for your business, contact us today.

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