Cash resources are the lifeblood of any small business venture. As we’ve discussed in previous posts on the United Capital Source blog, daily operations for any organization rely on a steady stream of money to pay for supplies and labor. Whereas an individual can just tap into a credit account during a few days of financial stress, a business that cannot make ends meet for even one day can go belly-up without help.
That’s why we think small business owners everywhere will breathe a sigh of relief over some good news coming from government lending officials. As this article published by The Washington Post reports, the U.S. Small Business Administration (SBA) is relaxing its rules on some lending practices, including the prerequisites a business must meet before qualifying for popular loan programs.
The changes will affect two of the SBA’s business funding programs. The 7(a) loan program is a basic loan program where a bank provides funding that the SBA promises to repay in part if the business goes bankrupt. The other affected program, the 504 loan program, funds loans for capital machinery and real estate purchases.
One of the relaxed rules involves the wealth test, where a business loan application could be rescinded if the SBA found that they had significant personal access to wealth through family or other connections. Many officials noted that this rule was very little used anyways, so doing away with it shouldn’t change much. More flexibility in 504 loans allow business owners to provide their own collateral in case of default. This way, should a business default on a loan, they’d be able to keep the trucks or equipment operational as long as they could put up some equivalent form of collateral.
United Capital Source wants to keep the wheels turning at businesses and manufacturing facilities all over the country. Contact our professional and friendly staff if you need to negotiate the terms of a loan or cash advance to keep your business, small or large, in the black.