Loan Options to Fund Small Business Growth

Question: I started my business about two years ago and wanted to expand it, but need financing. What loans are available to small businesses on Cape Cod?

Answer: You might consider an SBA loan product or a direct loan provided by local banks such as Cape Cod Five Cents Savings Bank or Coastal Community Capital (Lenders). The first step is to contact your lender or Coastal Community Capital for advice on the type and term of loan best suited for you and your business. Term loans are good for real estate, equipment, and permanent working capital. Lines of Credit are excellent for seasonal working capital needs. Sometimes, a term loan and a line of credit are what is needed by the businesses. Both banks and Coastal offer complimentary advice.

SBA 7A Loan Guarantee – This loan is provided by a Lender and guaranteed by the US Small Business Administration. The maximum loan amount is $5,000,000 with an SBA loan guarantee limited to $3,750,000 per borrower. Rate, terms, and amortization are negotiated by you with your lender and are generally up to 7 years for working capital, ten years for equipment and 25 years for real estate. Some of the SBA’s requirements are: the business has to be profitable and demonstrate the ability to repay which may require projections, the borrower must be a citizen or have a valid “green” card and be of good character, and not be involved in real estate speculation. You can use the proceeds for working capital; equipment, business or real estate purchase; refinance existing debt; lines of credit; and most legitimate business purposes. Collateral is required to the extent available and subject to the lender’s collateral policies. Coastal may work with your bank to secure the loan, and SBA guarantee or Coastal can produce the loan and the loan guarantee. If a business plan is needed, Coastal can help.

SBA 504 Program – This loan is provided by a Lender and Coastal, in conjunction with the SBA. The bank provides 50%, Coastal 40% and the borrower 10%. The 504 is a long-term financing tool providing long-term, low fixed rate financing to acquire owner-occupied major fixed assets like land, buildings or modernization. It can also be used for debt refinancing when there is a business expansion for up to 80% of the projected expansion costs of up to $5 million. Most of the requirements of the SBA 7A program are applicable to this program as well. The benefits of the 504 are low down payment and fixed rates for up to 20 years. December’s rate was 4.885%. Startups are eligible.

Non-Profit financing is also available through the USDA-Rural Development. Contact Coastal for more information on these programs.

When you are ready for growth, look at all available funding sources, including SBA loan products which are quick to obtain and advantageous.

Funds are available for small business growth on the Cape.

For more information on financing your small business growth contact: SCORE – (508) 775- 4884 or visit us at

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