If you are awarded a 7(a) loan, you can use the loan proceeds to help finance a large variety of business purposes. However, there are a few restrictions. For example, proceeds can’t be used to buy an asset to hold for its potential increased value or to reimburse an owner for the money they previously put into their business. Basic uses for 7(a) loan proceeds include:

  • To provide long-term working capital to use to pay operational expenses, accounts payable and/or to purchase inventory
  • Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
  • To purchase equipment, machinery, furniture, fixtures, supplies or materials
  • To purchase real estate, including land and buildings
  • To construct a new building or renovate an existing building
  • To establish a new business or assist in the acquisition, operation or expansion of an existing business

Most 7(a) term loans are repaid with monthly payments of principal and interest. For fixed-rate loans, the payments stay the same because the interest rate is constant, whereas for variable rate loans the lender can require a different payment amount when the interest rate changes.  Applicants can request that the lender establish the loan with interest-only payments during the start-up and expansion phases (when eligible) to allow the business time to generate income before it starts making full loan payments.

Collateral

Every SBA loan has to be secured by all available assets (both business and personal) until the recovery value equals the loan amount or until all assets have been pledged (to the extent that they are reasonably available). Personal guarantees are required from all owners of 20 percent or more of the equity of the business, and lenders can require personal guarantees of owners with less than 20 percent ownership. Liens on personal assets of the principals may be required.

Owner Insights
….in this economy, we can afford to go easy on our meal prices because they are partially subsidized by high beverage volume and low beverage cost.
Irish Pub Operator | TEXASView Owner Insights
Pub Facts

Irish Pubs, as we know them today, have been in existence since the late 1800's. That means they have survived through the British brutality in Ireland, World War I, the 1918/1919 Spanish Flu pandemic, the Great Depression, World War II and several global recessions since. So, we look forward to Irish Pubs pulling through COVID19 as strongly as ever before.