January Spotlight: To SBA or Not to SBA – Finding the Best loan for Your Needs

January Spotlight: To SBA or Not to SBA – Finding the Best loan for Your Needs
by Leslie Wilkins

Small Business Association (SBA) funding is a valuable resource for many of our clients. But it’s not for everybody. We always consider whether our clients are best served by SBA loan products or if other loans may be the better fit.

At GRP Capital, we get to know you first to determine your goals, your business plan, your aspirations and what keeps you up at night. Then we get to work looking for the best financing for you—one that matches your goals and needs.

SBA loans offer various small business guaranteed loans that can be utilized to fit diverse financing needs including acquisitions, financing of debt, facilitating improvements, issuing credit lines and other traditional development.

Conventional loans are traditional mortgages provided by banks, credit unions, savings institutions and other traditional financial institutions.

Bridge Loans are an excellent temporary solution, one that GRP is uniquely positioned to provide utilizing our GRP Capital Debt Fund. Bridge loans can be used as an intermediary financing option until a borrower secures permanent financing. The flexibility of bridge loans allows for quick and strategic business decisions, essentially allowing our clients to strike when the iron is hot.

Non-Recourse Loans are a great option for a highly profitable venture seeking funding for continued growth opportunities. The best matches for non-recourse loans are clients with a long history management, with liquidity for higher equity injections than conventional or SBA loans.

Below are some of the aspects of financing that we consider when we determine the best match for our client’s needs.

Timeline: Bridge loans can be closed quickly, followed by conventional loans. SBA loans can take the longest to close because of the double approval process (lender and SBA must approve). The SBA, as a federal government agency, is adversely affected by government shutdowns. As we write this Spotlight, we are in the midst of the 3rd government shutdown in one year. During this time, loans cannot be approved by the SBA, which prevents the loans going to closure.

Size of Loan: Conventional loans and non-recourse loans are not limited by an upper amount, only by the lender’s choice of upper limit. SBA loans are targeted towards smaller businesses, so they are typically reserved for projects under $5M.

Terms: What will work best for the client? Adjustable rates? Fixed rates? Longer or shorter amortization? We search for the best match only after we understand what the client’s priorities are.

SBA Eligibility: SBA financing is designed to be the loan product of last resort for borrowers. If the financing can be acquired through conventional means, the SBA encourages borrowers to do that. Certain projects are simply ineligible for SBA financing, including ground-up construction. Each guarantor for an SBA loan has a limit for how much he or she can guarantee. That magic number is $3.75M. So any guarantor cannot be signing off on multiple loans if they add up to more than $3.75M

Spotlight on Motel 6 – Weatherford, Texas

Motel 6 Weatherford TXMotel 6 Weatherford TXMotel 6 Weatherford TX

GRP recently arranged the financing and purchase of the Motel 6 in Weatherford, Texas. The property had been stabilized, turned around, and the owner was eager to sell in order to focus on other properties. Both the current owner and the prospective buyer were ready to complete the transaction, but there was a very short time frame needed.

We at GRP pride ourselves on our ability to usher a loan from origination to closing, but we are aware that SBA-backed loans cannot move lightning fast. Because SBA requires a double approval process from both the lender and the SBA, there is a built-in lag time.

For the principals involved, the quick turnaround was non-negotiable. We were able to utilize our debt fund and conventional financing to make both buyer and seller happy, close the loan in 6 days and allow both of them to move forward with their business plans for 2019.


Whether you are expanding your existing portfolio or investing in your first business, GRP Capital has the resources to help you meet your required capital needs. Our services include divisions of Real Estate Capital MarketsSmall Business FinancingConstruction LendingGRP Capital Debt Fund, and Consulting and Advisory. Learn more at grpcapital.com.

We are a leader in commercial lending, advising, and investing because we are experienced, connected, and invested. Contact us to start the conversation.