The U.S. plumbing industry generates more than $100 billion in revenue each year, and employs nearly 500,000 Americans, making it an essential facet of the U.S. economy. If you own a plumbing business, and you want to expand your company, buy a competitor, or refinance business debt, getting SBA financing could be one of the best way to do so.
How Plumbers Can Use SBA 7(a) Loans
The SBA 7(a) program was created by the Small Business Administration’s in order to help expand the amount of financing available for small and medium-sized businesses across the United States. Today, the 7(a) program guarantees nearly $26 billion of small business loans per year. These loans are a particularly effective choice for plumbing companies, as they can finance working capital reserves, equipment, and real estate.
In particular, plumbing companies can use SBA 7(a) loans for:
Funding working capital: Paying salaries and keeping up with other regular businesses expenses, such as vehicle maintenance, utilities, and marketing can drain even the most financially savvy business owners. Fortunately, the SBA 7(a) loan offers up to 10-year terms for working capital, making it easy for your business to get the financing it needs to thrive.
Refinancing business debt: Refinancing debt is one of the most common uses for the SBA 7(a) loan. However, the debt must currently be offered to the borrower on unreasonable terms, and needs to have been used for SBA-loan eligible business expenses, not personal purchases.
Buying equipment: Making sure you have the right equipment is one of the most important ways to make sure your plumbing company is ready to handle any job— and, with it’s 10-year equipment loan terms, the 7(a) loan can help you stay prepared.
Buying out a partner: If your plumbing business has one or more partners that want to leave the company, you can use an SBA 7(a) loan to purchase their part of the firm.
Expanding your plumbing business: Whether it’s buying another van to handle a wider customer base, buying state-of-the-art equipment for larger jobs, or even purchasing commercial real estate to open a new office, an SBA 7(a) loan can help your plumbing business grow to new heights.
Other SBA Loans for Plumbing Companies
SBA 7(a) loans are a fantastic option for many plumbing business, but they’re not the only SBA loan option on the market. Many smaller plumbers, especially those just starting their businesses, may find that an SBA microloan is a more effective option. SBA microloans have a maximum loan amount of only $50,000, but they have much more relaxed credit requirements. On the opposite end of the spectrum, the largest plumbing firms on the market may find that an SBA 504 loan is the best choice for their business, as it allows them to purchase real estate at significantly lower interest rates than SBA 7(a) loans. Despite that, SBA 504 funds cannot be utilized for working capital, which may be deal-breaker for many small business borrowers.