SBA 7(A) loans are an attractive option for small businesses in need of capital. CPAs can speed up the process.

The value of working with an accountant for your business extends beyond filing annual returns by April 15. An important skill that an accountant brings is the ability to legally minimize a company’s tax liability. But, just as important is helping the business owner forecast cash flow, find ways to achieve cost savings, and ultimately reduce costs. In addition, accountants can help track costs, help clients maximize profits, and help grow a business successfully.

More and more business owners are working with their accounts to secure financing. During the Paycheck Protection Program (PPP), small business owners were instrumental in helping them file their applications. Later, they helped their clients with loan forgiveness.

In the year In 2021, launched the CPA Business Funding Portal, a cloud-based platform powered by Biz2Credit’s Biz2X technology, which streamlined the application process during PPP. The use of the cloud-based platform has since expanded to help accounting firms secure other financing options, including working capital, term loans, employee retention credits (ERTC) and, most recently, SBA 7(a) loans.

Continually rising interest rates and credit crunches at large banks, as well as small and medium-sized banks have combined to create a credit crunch for small business owners seeking capital. SBA 7(a) loans, made by SBA-approved lenders and backed by government guarantees, are an important source of capital for small businesses in these tough times. The CPA Business Fund Portal supports the accountant’s advisory role in the lending process and provides a 100% online funding application process for the benefit of their clients. Meanwhile, the platform provides CPA firms with a client management dashboard, as well as time-saving integration with client payroll and bank accounts, and application preview and update features.

“In an increasingly complex economic environment, small and medium-sized businesses need trusted advisors to navigate complexities and manage cash flow,” said President and CEO Eric Asgerson. By adding an SBA loan option to the CPA Business Funding Portal, they can deliver more comprehensive financial guidance and better position their SMB clients to secure the capital they need to operate. Invest in businesses and future growth.”

The SBA 7(a) loan option is ideal for small businesses because of its low down payment, competitive interest rates and long-term financing. These loans provide opportunities for small business owners who may not qualify for other loan options to obtain financing.

Up to $5 million, SBA 7(a) loans can be used for short- and long-term working capital, to refinance existing business debt, purchase and installation of machinery and equipment, furniture, fixtures and fittings.

SBA lenders are encouraged to refer applicants to funds they would not normally finance because the government guarantees most loans. For example, the SBA guarantees 85% of regular 7(a) loans up to $150,000 and 75% of loans over $150,000. When the borrower defaults, the lender – usually a small and medium-sized bank – can still recover most of the money. While interest rates vary from lender to lender, the SBA sets limits on what lenders are allowed to charge.

The current SBA 7(a) loan interest rates are Prime + 2.75% for loans of $50,000+, Prime + 3.75% for loans of $25,001 to $50,000, and Prime + 4.75% for loans of $25,000 or less. With a prime rate of 8.25% starting in May 2023, business owners can expect to pay between 11% and 13% interest on an SBA loan. Although rates are much higher than they were before the pandemic, SBA loans are still available when banks are reluctant to make small business loans. Additionally, these rates are lower than the cost of capital from alternative lenders, which can charge 30% or more for their financial products.

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