Hey all, I have an SBA loan for a little over $500,000. My interest is 11.5% with 10 year terms. Majority of my $9,600 monthly payment is interest.
What can I do to lower my interest? I dont know how the government can possibly understand how a small business can survive with such high interests.
Does anyone know of any private lenders? Other banks that will exponentially decrease this?
I’m struggling and November was not a great month for us…
We’re in the same boat. $500k balance on our SBA backed loan at 11.5%. We started at 6.5% when we got the loan 5 years ago. After almost a year at this high rate we’re barely surviving as a business. Our bank said they can’t do anything for us. What do they care if we fail and default? The SBA will just pay them off. So I’m in the process of refinancing through a local credit union. They’re offering 7.5% which isn’t awesome but a hell of a lot better than where we’re at now and it’s a fixed rate. When we pay off the current loan at the current bank we can drop the SBA and their added 2% they tack on to every payment. Will be such a relief when it goes through. So I’d suggest trying a local credit union and seeing what they can do for you. I’m sorry you’re struggling too, best of luck to you!
Are most SBA loans not fixed? Genuinely curious as I assumed they would be since they are supposedly helping small businesses, and ya know stability is helpful.
Nope, ours is prime +2%, and that is standard with 7(a) loans. I was also under the assumption the SBA was supposed to help small businesses, until we signed our loan docs and saw their terms. We had to take the deal as that was our only option to secure financing at the time. We’ve had zero support from them since, don’t even have a contact there that I could reach out to with questions.
I will say, they did help when we were shut down during Covid. After we’d been forced to close for over 3 months they stepped in and made our loan payments for the next 6 months (it was part of the CARES act). It got us through that year but they are definitely making all that money back right now with this ridiculously high interest rate that just keeps creeping up. So, all these small businesses they “saved” during the shutdown are now struggling to survive (if they haven’t already gone under) and its nothing but crickets from the SBA about it.
No. Most 7a loans aren’t fixed. They are, but good luck trying to get one. Also. Rates will go back down. I wouldn’t want to be stuck with a fixed rate right now.
Curious about that as well. Adjustable rate SBA loan sounds bonkers but surely this guy didn’t sign on at 11.5.
They are all AR, I think they stopped doing fixed rates several years ago.
It depends on the bank offering the loan. Online and FinTech lenders such as LiveOak sell off their debt, so they need an adjustable rate. Brick and mortar banks can still offer a fixed rate, or fixed for five years, then floating option.
We used a preferred lender who services their own SBA loans. Interest rate is killing us…
May look at a regular bank but they usually want like 70-80% of the loan secured against hard assets afaik.
Yuck, we’ll def scratch that off the list.
Why would you be looking at a 7a loan if you have other options?
Get the SBA loan and then refi. That’s what I did
Most banks won’t lend you any money as it’s deemed too risky. 7a is the only realistic option for either working capital or for a small business purchase.
Ours is but I believe it’s because it was EIDL so they fixed it for 30 years.