There's a hidden part of the most recent stimulus bill that I've heard is zero mention of so, we all know about the stimulus checks the paycheck Protection Program the ideal grants, but as a part of this new bill, the small business administration is required to make eight months worth of payments on new and existing SBA Loans completely free

This is this is real

It's insane

There's actually part of the cares act back in March of 2020

However, its back and extends to two months longer than the first time around so the SBA offers several different loan programs that offer the ability to purchase real estate expand your business or even purchase an entirely new business and get eight months totally paid for so let's explore these details a little bit further

So what exactly is this program? As I said the SBA is required to make eight months worth of payments a new and existing SBA Loans, but more specifically this works for Loans, 504 certified development company loans and microloans and these aren't just payment deferments

It's eight months of full payments of principal and interest that you the borrower will never be responsible for it seems too good to be true

I know so let's break down the different types of loans and some creative ways

You could use these loans use this funding and get it paid for for a solid chunk of time

So even if you're not looking to buy a new business this program could benefit you in a huge way

So just make sure you watch the entire video to know where to start and what your what your options are here

Oh and also if you haven't be looking for a PPP loan with your small business, I have partnered with wombly and with them they let you know as soon as the paycheck protection round 2 is available and then they're going to make sure to get you a slice of the funding

Once that funding is available

I've link them in the description of this video and I think it's worth checking out

So starting off with the options here the most popular type of SBA loan is the 7A loan

These loans can be used for a huge variety of things for working capital refinancing debt purchasing a business purchasing real estate purchasing equipment for your business

The loan size can be anywhere up to five million dollars

However, it usually isn't lower than $30,000 for this program, but don't worry if you're looking for a smaller loan because there's other programs that cover the smaller end of the spectrum that I'll cover

In just a little bit

And the first thing you might notice is this loan covers a ton of different things

It's a very versatile form of financing

So let's say you have more work coming in than before and you need to expand get a working capital loan and let the SBA pay for eight months

Maybe your business is slow down due to the pandemic and you having a hard time making debt payments

Well refinance your debt and let the SBA pay for eight months

And yes, of course

You're looking to buy a business the SBA will cover eight months of payments

This is real lenders are aware of this the SBA was allotted billions of dollars to run this program and hardly anyone is talking about it

Also as a side note here the SBA will need to set up this program again, and it may not be available at the time of watching this video

So if you're interested make sure to check with the local SBA lender to see when this program exactly starts

I know

There's a lot of chaos right after a stimulus bill is passed

So there's usually a period of time where you can't quite apply yet

So 7A loans vary quite a bit based on what exactly you're trying to have financed like the terms of these loans, but let's cover some general loan details and ranges here

So current interest rates for these loans are between 55

and 975%

And this really varies based on what you're having financed or the loan term longer loans typically have higher interest

It's there's another side note

There are other SBA and lender fees for these new loans

So if you're interested in one of these loans, make sure you check out the fees from your specific lenders because they can add up and also the SBA will require at least a 10 to 20% down payment for these loans

However, some lenders require even higher than that

I've seen as high as 35% So you'll want to check with that to before with your lenders before getting too deep into the process if you can Can't afford that big of a chunk

There are some creative ways to come up with down payment assistance

If you can't quite afford that chunk but you'll have to again talk to your lender about that maximum loan terms are up to 10 years for this program for working capital or up to 25 years for commercial real estate loans and you need a 680 credit score to even get in the door also because this is likely a question on people's minds

There are certain situations where you can actually use a 7 a loan for Start up, but it's much harder to get that loan in one of those situations in most cases to make that happen

You'll need excellent credit and a high net worth to be considered for a 7 a start-up loan

It's difficult but not impossible

And if you are able to make it work the SBA will still pay for eight months worth of payments

I should also mention that the last time I talked about these loan programs

I received countless emails requesting consulting services to guide

You through the loan process? Unfortunately, I do not offer this service because I just think high quality loan officers going to be able to do a much better job at this than than I ever could so let's just leave it to the pros there

I do

However offer regular business Consulting for sales marketing and management

So feel free to send me an email if you're interested in that and if you're looking to just give me a little thanks for putting together this video

I would happily accept a like And subscribe and return

Oh and also on a 7 a loan if you are purchasing a As you will likely be required to prove industry experience or management experience and have a solid business plan in place to make this happen

It's not an easy process, but it can pay off in a big way

But again, this isn't impossible to get past that management or industry experience, but it might just, you know, create a roadblock

Now, let's take a second to work out an example here with a real-life business currently for sale this envelope manufacturing business

Yes

This is a standalone

Loan envelope manufacturing business

There's a million ways to make a million dollars

I swear they have just over five million dollars in Revenue sellers cash flow of 866 thousand dollars all for a sale price of two point four five million dollars a multiple of two point eight times earnings might not be a bad deal

Anyways, let's say you purchase this business at full price for one point nine million dollars at a 10-year term and we're going to estimate estimate high on the interest and go eight point five percent interest with Of point five percent down or $306,000 down leaving a loan of two million one hundred and forty thousand dollars

The monthly loan payment would be about twenty six thousand five hundred dollars a month which sounds like a lot of money but this business profits over seventy thousand dollars a month

Meaning your debt ratio is well under two to one and still in that safe range

And if the SBA pays for 8 months of payments they pay for that $26,500 eight months in a row, which comes out to just about 8% of the total purchase price of the entire business where else can you get a deal like that nowhere plus you're purchasing a cash flowing business

So you could even keep paying down the loan over the first six months and just end up with less interest at the end of the loan and a safer place by the end of that 10 year term

All right moving on from here the second type of loan that the SBA will pay eight months of is a CDC / SBA 504 loan

This program is for business owners who are looking to purchase or build real estate

They plan to operate out of or to renovate a building or to purchase other large fixed assets

If it's a building the business has to occupy at least 51 percent of the building purchased or built in order to take advantage of this loan

However, this could still be an excellent opportunity to buy a larger building than you need and rent out a portion of it

And current interest rates are cheap for this kind of loan because the federal interest rates are so low right now

You're looking between two point two four percent and 27

one percent loan terms here are either 10 or 20 years

The other terms on this program are similar to The 7A loan

So I'm not going to take up your time explaining all of that again

Then finally the third type of loan the SBA will pay eight months of is the SBA microloan

This is perfect for those who are looking to start a business or just need a smaller

Amount of funding for their existing business a microloan can be up to $50,000 and like I mentioned it's used for starting or expanding a small business

This loan cannot be used to write refinance debt or purchase real estate

The loan term is up to six years with an interest rate between 5 and 10% Now I suspect that this program is going to be the most interesting one to people and it could be used very similar to the similarly to that example

I made earlier with the SBA paid for about nine percent of that

That envelope manufacturer

So just for fun

Let's go through an example of a much smaller business here a home pet care business for sale for $92,000

It does two hundred and sixteen thousand dollars in sales with cash flows of $42,000

So a down payment of 10% on this would leave a remaining loan of 80 $2,800 this loan at a six-year term and eight point five percent interest would result in monthly payments of 1027 dollars to your lender

So we take that times 8 the eight months of the SBA will pay for it, which equals 8216 dollars are roughly again nine percent of the entire business price paid by the SBA it is wild so from here, if you're interested, you're going to have to go through an SBA lender similar to how the paycheck protection works

I would strongly recommend you take a look online and see local lenders that approve the highest amount of SBA Loans in your area and use that lender there

To be much more familiar with the program and get this process much faster

So I really hope that you can benefit from this program

If you end up securing a loan or do anything cool this program, please let me know

Keep me updated on your business's progress

So I'd like to just thank you for watching and I hope you have a profitable day