Man filling out a bank loan application

If you were thinking about applying for an SBA loan, you’re chances of getting funding for your small business idea may have improved slightly.

The U.S. Senate on Tuesday passed a bill that would allow the Small Business Administration to increase the lending cap on its primary and most popular offering, the 7(a) Loan Program.

The legislation, which is expected to be signed by President Trump, avoids a shutdown of 7(a) lending by raising the cap on the program by 15 percent. The U.S. House of Representatives already passed the bill last month.

The SBA’s 7(a) Loan Program offers entrepreneurs and other small business owners loans of up to $5 million to fund startup costs, buy equipment, purchase new land, repair existing capital assets, refinance existing debt, purchase point-of-sale systems and more.

Part of the reason why the SBA’s loan program is so popular with merchants is that it offers increased flexibility, longer terms and potentially lower down payments than other financing options. There are also special programs aimed at businesses located in under-served areas, members of the military community and business owners looking for help with short-term and cyclical capital needs.

The SBA does not make the loans directly to merchants. Instead, the SBA guarantees the loans that commercial banks make to small business owners. With the government backing, the banks are more likely to loan to entrepreneurs who may not otherwise receive approval.

To be eligible for the SBA loan program, small business owners must demonstrate a need for funds, meet the SBA’s size standards, operate for a profit and have some reasonable equity of their own to invest. In addition, the business must operate within the United States or its possession and the business owner must demonstrate that they have tried to obtain financing elsewhere before applying for an SBA loan.

As mentioned earlier, the 7(a) program has become an extremely popular way for small business owners, including restaurateurs and retail shop owners, to get funding. According to American Banker, the program has not had an interruption in nearly three years despite that fact that it has been pushed to record lending levels during that same time period. The program guaranteed loans totaling more than $25 billion in fiscal 2017 and will likely break that mark in fiscal 2018.

Wondering about costs for point-of-sale systems and other technology for your business? Contact us today to learn about your options.

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