SBA 7(a) & 504 Loan Attorney in Arizona
The Small Business Administration (SBA) plays an important role in fostering the growth of small businesses across the country. Without SBA loans, many businesses that we rely on every day would not exist. There are two main loan programs offered by the SBA: 504 loans and 7(a) loans.
SBA 504 Loans
SBA 504 loans are for the big items and projects. The funds can be used to purchase commercial real estate, develop property, acquire equipment, expand and modernize businesses, etc.
Because the funds are used primarily to acquire or improve assets, the 504 loan is heavily collateralized. The maximum 504 loan amount is $5,000,000.
It is important to note that SBA 504 loans may not be used for working capital, inventory, consolidating or refinancing debt. There is one exception to that, under a recent law change with the Small Business Jobs Act of 2010, there may be temporary refinancing options available under a 504 loan. Certain restrictions apply, including an expansion component.
SBA 7(a) Loans
SBA 7(a) loans can be used for operational expenses, working capital, supplies, etc. In that sense, they are a bit more flexible. But 7(a) loans cannot be used to refinance bad debt or pay delinquent taxes, among others.
Since the funds from a 7(a) loan may go to things that aren’t easily collateralized, in the event of default, the personal guarantee required for most SBA loans can come into play more prominently.
Negotiating and Settling SBA 504 & 7(a) Loans
Our firm is skilled at negotiating and settling SBA loans. Whether you have a 504 loan or a 7(a) loan, we understand the process and options available. An attorney negotiated SBA loan settlement can help you resolve the debt without bankruptcy.
A formal SBA Offer in Compromise may be appropriate if you’ve closed the doors on your business. Negotiating large reductions in 504 and 7(a) loans is possible, but not easy. A skilled an experienced attorney can navigate the process and help you get on the road to financial recovery.
Call for a free consultation with an attorney.