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If you are asking, “What can small business administration (SBA) loan funds be used for?” you are not the only one! Many business owners think these loans are only for buying buildings or big equipment, when, in reality, SBA loans are versatile.
If your small business is profitable and established, SBA funding could help you grow faster and financially smarter. Business Funding Group LLC (BFG) is qualified to give you a breakdown of the most popular uses of SBA loan funds.
Owner-Occupied Real Estate
Buying property for your business is one of the most common uses of SBA funds. Using SBA loans to invest in real estate can lower monthly costs and build long-term equity at the same time.
Different businesses may have different real estate needs. For example, a law firm could purchase a new office building, while an e-commerce brand might buy warehouse space for inventory.
Equipment and Machinery
SBA loans can cover upgrades to tools and other equipment, such as a dental office purchasing imaging equipment, an e-commerce company upgrading its fulfillment tech, or a print shop replacing its aging production gear.
SBA loans can come with long repayment terms, so you can make a big equipment purchase and spread the cost over a decade or longer. This helps protect your cash flow and keep monthly expenses manageable.
Working Capital
Working capital is a flexible and popular use of SBA funds. This covers various day-to-day expenses that keep your business moving. Examples include boosting cash flow when there is a lull in caseload, stocking up on inventory before a holiday, and hiring new talent. SBA loans can also cover short-term growth and ongoing operations, such as rent, payroll, or software subscriptions.
Marketing
Visibility is necessary for growth. You can channel SBA loan funds toward return on investment marketing efforts. With the right strategy, a marketing campaign could return large amounts in new business.
Some example campaigns include a boutique law firm investing in SEO and Google Ads, an e-commerce brand launching influencer and paid social campaigns, and a consulting firm hiring a digital agency for branding and email funnels.
Refinancing Debt
You may be able to refinance business debt into an SBA loan with lower monthly payments and more favorable terms. Refinancing is one of the smartest ways to reduce stress and free up cash flow for other purposes. A small business may have several high-interest debts consolidated into a single, manageable payment.
Partner Buyouts
SBA funds can provide a clean, structured way to help you buy out a business partner. There are many situations where one partner might want to buy the other out. For example:
- A partner wants to retire
- One owner is ready to move on to the next venture
- A shift occurs in the company’s vision or culture
Inventory and Supplies
Some businesses may need SBA funds to purchase inventory or supplies. This option is better than using a business credit card or draining your cash reserves, as you will get better rates and terms with the SBA.
A business could utilize SBA financing to prepare for holidays or product launches, restock after big sales, or purchase in bulk.
Technology Upgrades
SBA loans can help your business stay modern and efficient with technology upgrades. Better systems mean faster service, fewer mistakes, and more satisfied clients. Boosted productivity also translates to boosted profits.
Examples of technology that may benefit from an upgrade include cloud-based case management, online platforms or customer relationship management tools, and cybersecurity and compliance technology.
BFG Can Help
You can use SBA loan funds for much more than many business owners originally think. Not sure where to start? BFG will walk you through it. We will help you understand your loan options, determine eligibility, and package your application to give you the best shot at approval.
Contact us today online or by phone to discuss a breakdown of the most popular uses and how SBA funding can help you grow.