Indiana SBA Loans – Refi to Conventional Business Loan

Indiana SBA Loans refinanced to a conventional loan can save Indiana business owners up to 2% in interest right now.

If you have a business in Indianapolis, Fort Wayne or even rural Indiana, you may be able to take your Indiana SBA loan and switch it to a conventional business loan to save quite a bit of money in the long term.

SBA 7(a) loans and rates have looked great in the past few years, but with Rising Interest Rates, this is a very good time to look at your options.

Foresight Business Funding is an Indiana Business Loan Consultant that offers both SBA Business Loans and Conventional Business Loans.

In this article we are discussing options to Indiana Businesses that have business loans between $500,000 and $5,000,000. We discuss general options. SBA loans compared to Conventional Loans and whether is this might be a good time for you to refinance your SBA loan for a less costly conventional loan. (Please look at your loan document- each business loan, and each individual bank, will vary.)

Recently, we have seen interest rates spike so the money spent on interest last year, might be better spent on other business needs such as equipment, business development or interest on a bigger loan to help your business grow.

As we see the federal reserve raising rates drastically, it might be a great time for you to review the SBA (7) loan you took out 3-7 years ago.

Most lenders prefer to offer SBA funding because the SBA typically covers 85% of the loan. Therefore, the interest charged on most SBA loans is different than the interest charged on conventional. It’s typically easier for a business with real estate to qualify for the SBA loan, but if you are an Indiana Business with a good history, and Commercial Real Estate it is quicker and easier to qualify for a conventional business loan from one of our Indiana lending institutions.

These are not big banks. These are community banks and institutions. These banks prefer $500,000 to $5,000,000 loans.

How are business loans interest rates generally determined?

Indiana SBA Loan compared to an Indiana Conventional Loan

SBA (7)a Business Loans

Indiana SBA Loan Rate based off of Prime Rate

Many SBA loan rates are variable rate loans set to The Prime Rate (5.5% + 2.75% max rate) (7/28/2022)
Most loans will be at an 8.25% interest rate
(Your loan will vary (LIBOR, SBA Peg?). (Please consult your loan document)
Payments generally increase when the prime rate goes up. Passed to borrower quarterly
8.25% is a decent rate, but if inflation is here to stay….that rate could keep going up. In 1990 the Prime Rate was 10%

Indiana Conventional Business Loans

Indiana Conventional Loan Rate based off of 10 yr. Treasury Bond

Opportunity to lock in a fixed rate in the 5.5 to 6% range for a 10 to 15 year period, with amortizations of 20 to 25 if you have real estate. (7/28/2022) (with qualifying application.
Many SBA loan rates are variable rate loans set to The Prime Rate (5.5% + 2.75%)
(7/28/2022) Most loans will be at a 8.25% interest rate (Your loan will vary. Please consult your loan document)
The payments go up when they raise the prime rate and can go up quarterly.

8.25 % is a decent rate, but if inflation is here to stay….that rate could keep going up.

If you would like to schedule a consultation, click below

Let’s take a look at the opportunity cost of a current variable SBA Loan.

Assuming you fall under the current example, your SBA loan at 8.25% would give you a monthly payment of $7,884.

A Conventional Business Loan at 5.5% would give you a monthly payment of $6,140.

Assuming we can get you a conventional loan at 5.5% the difference is $20k a year and $523,000 assuming the rate differential stays the same.

Indiana Conventional Business Loans

Loan amounts from $500,000 to $10,000,000
80% LTV
Rates: 5.5%-7%*
Repayment terms from 10 yr to 25 yr
Funding in 5 to 8 weeks*
Most Industries Accepted
Projection Based Loans
Rural Properties
Development, MultiFamily, Construction
Indiana Banks & Institutions
Items needed: P&L, Balance sheet, 2 yr tax returns or Business Plan Projections for startups

If you would like to schedule a consultation, click below:

If you have an SBA 7(a) loan and aren’t sure how to analyze it to determine if its your best option, contact us or call (317) 589-0118.

We can help you decide if it’s the best financing for your business at this time, or whether there are better options for today and long term.

*You may not receive any offer for financing. Timelines are dependent on underwriting, appraisals and after we receive all documents.