Need a 10-Year SBA Equipment Loan? We Have You Covered!

June 21, 2022

Your business might produce innovative products or offer the highest quality services, but even the best companies can be negatively impacted by aging or inefficient machinery. When you need new business equipment and specialized machinery without compromising financial stability, a 10-year SBA (Small Business Administration) equipment loan could be the ideal solution.

Learn more about how you can take advantage of 10-year equipment financing, as well as the different types of business financing options available, and how to qualify and apply for equipment loans through Texas Gulf Bank.

Does Your Business Need a 10-Year SBA Equipment Loan?

As you grow, your company may need to replace or upgrade to long-life equipment and machinery (with a usage life of 10 years or more) in order to improve services or manufacturing. Equipment loans allow your business to purchase anything needed to manufacture or perform key services, such as:

Assembly or production equipment
Farm machinery
Food processing machines
Commercial printers
Industrial laundry machines
Commercial ovens or industrial kitchen equipment
Medical or dental equipment
Scientific or lab equipment

However, owning or leasing important equipment can require a significant capital investment that most companies aren’t in a position to support. 10-year SBA equipment financing offers your company the chance to obtain new or like-new equipment and machinery without depleting cash reserves or impacting working capital.

Although your business could opt for equipment loans with shorter repayment terms, it would also mean higher monthly payments, which could restrict growth and impact financial stability. Companies need to have cash reserves in place to soften the blow if a negative event impacts the company’s bottom line, such as a recession, rising costs, or the loss of a large client.

Ultimately, 10-year SBA equipment loans allow your business to have more favorable monthly payments and loan terms while still getting the equipment and machinery that is needed for long-term growth.

What 10-Year SBA Financing Options Are Available?

Business owners need financing options that offer flexibility, lengthy repayment terms, and manageable loan amounts for purchasing the long-life equipment they need. The Small Business Administration (SBA) is a federal agency that meets this need by partnering with banks and lending institutions to offer small business loan programs designed to help encourage business growth.

Although the SBA does not lend money directly to businesses, they partially guarantee SBA loans made by banks and help establish lending guidelines for how these loans should be structured. As a result, banks are able to offer longer repayment terms and loan maturities to small businesses, compared to non-SBA guaranteed loans.

The SBA offers two key types of loans to small businesses in need of 10-year equipment financing: SBA 7(a) loans and SBA 504 loans. Each one has specific guidelines for borrowers and lenders, and they come with different loan terms, interest rates, and repayment structures. Let’s examine further.

SBA 7(a) Loans

The SBA 7(a) loan is a general-purpose SBA loan that can be used to finance equipment purchases or refinance existing equipment for small businesses. These popular loans are suitable for many types of common business needs, and often include variable interest rates and monthly payments.

SBA 7(a) loans are ideal if you plan to:

Start a new business
Increase working capital
Purchase or refinance equipment or machines
Expand or renovate an existing business
Purchase inventory or raw materials
Acquire other businesses
Finance buy-outs of company partners
Purchase or refinance real estate and/or construct improvements on real estate to be occupied by the business

Borrowers can secure a 10-year repayment for purchasing equipment and machinery, but the term can’t exceed the expected life of the equipment being financed. If your company intends to use SBA 7(a) loan funds to buy, build, or improve real estate, you may be approved for up to 25 years to repay your loan.

SBA 504 loans

For more established businesses, SBA 504 loans finance real estate or long-term equipment purchases for small business owners. They’re an appealing financing option if your company plans to make large-scale investments in machinery, equipment, or real estate.

These loans offer small businesses fixed-rate, long-term financing for major assets such as land and buildings. In addition, your company may also use SBA 504 loans to purchase large machinery or heavy equipment since they normally offer a longer amortization and no balloon payments in the future.

Your company can accomplish the following goals with the help of SBA 504 loans:

Purchase commercial land
Buy existing business facilities
Finance long-life equipment and machines
Construct or renovate current facilities

An SBA 504 loan cannot be used for:

Working Capital
Inventory
Consolidating, repaying or refinancing debt
Speculation or investment in rental real estate

SBA 504 loans are a popular choice for larger, established businesses because they provide long-term, fixed rate financing for major asset acquisitions that promote business growth and job creation. Loans are generally capped at $5 million, but there is flexibility for eligible projects. Certain energy-efficient or manufacturing projects may qualify for more than one 504 loan up to $5.5 million each.

This type of loan offers stable monthly payments with fixed interest rates, as well as a floating rate option that is tied to the Wall Street Journal Prime. Repayment terms can range from 10, 20, or even 25 years. In contrast to SBA 7(a) loans, the primary restriction for these loans is that funding cannot be used for working capital or to purchase inventory.

Potential borrowers should note that the SBA 504 loan has a more complex loan structure, with three distinct components:

Bank loan: A bank or lender provides 50% of the total loan amount.
CDC loan: An SBA-approved Certified Development Company (CDC) provides up to 40% of the loan amount.
Borrower down payment: The borrower provides as little as 10% down payment for the loan.

CDCs are local nonprofit lenders that participate in SBA 504 funding in order to encourage and strengthen economic development within their communities. As part of 504 loan funding, your company will need to demonstrate to the CDC your ability to use funds to create jobs, reduce energy consumption, or meet other specific public-policy goals.

SBA Loan Qualifications

If your company is interested in applying for a 10-year equipment loan through Texas Gulf Bank, then SBA 7(a) or SBA 504 loans may be the best fit for your business needs. To qualify for an SBA loan, your business must meet the following criteria including, but not limited to:

Operate within the U.S. as a for-profit, owner-operated small business
Have available equity to invest
Possess a credit score of at least 650 or higher
Provide personal guarantees for repayment
All loans are subject to credit approval
Company must meet additional TGB lender and SBA loan-specific qualifications

All SBA loan applications require confirmation of your ability to repay the loan, source of equity injection and eligibility. SBA loans typically take longer to approve and fund than traditional loans, so you’ll need to account for the added processing time when considering your funding goals and purchasing needs.

Texas Gulf Bank Can Help with Your SBA Equipment Financing

An investment in long-life equipment means your company can have the functionality and efficiency needed for scaling growth and meeting long-term goals. Texas Gulf Bank has proudly served Texas Gulf Coast businesses for over 100 years. Our experienced team of loan officers can discuss all equipment financing options available, including SBA loans.

When you choose Texas Gulf Bank for your equipment finance needs, you can expect:

A strong partnership with our lending staff who are knowledgeable of SBA programs and guidelines to help ensure a smooth application process.
Quick turnaround times for loan applications.
Competitive loan pricing, including fixed and adjustable rates.
True customer service focused on building a strong interpersonal relationship with you and your business.
Effective communication and integrity throughout the application process.

Contact Texas Gulf Bank today to discuss a 10-year SBA equipment loan option for your business. You can also contact our expert lending team using the form above. We look forward to helping your company achieve long-term growth and success.

All Loans Subject to Credit Approval