Capital Programs for Small and Mid-Sized Businesses
WHY STRUCTURING MATTERS
Many financing requests are declined not because the transaction is impossible, but because it is paired with the wrong capital source or presented in a way that does not align with lender expectations.
Choosing the right program and structuring the transaction appropriately from the beginning can significantly improve approval probability, reduce unexpected underwriting conditions, and shorten the path from application to closing.
Each financing program has its own eligibility rules, credit culture, and structuring nuances. The same transaction may be strong under one program and unworkable under another. Our role is to evaluate the full picture, identify the best capital fit, and position the request in a way that reflects how lenders actually make credit decisions.
Flexible Capital Solutions helps clients evaluate and structure financing across several government-backed and asset-based programs. Below is an overview of the primary capital solutions we work with and when each is most effective.
SBA 7(a) LOANS
SBA lending is widely used because of the leverage it provides. In many cases, it allows business owners to accomplish goals that would require significantly more capital with conventional financing.
Real-world examples include business acquisitions, competitor buyouts, owner-occupied real estate purchases, partner buyouts, and refinancing of certain higher-payment or shorter-term debt.
Outside of all-cash purchases, a large portion of small business acquisitions are financed using SBA 7(a) loans because of the longer repayment terms and lower equity requirements compared to many conventional structures.
When the buyer has industry experience and the transaction meets SBA eligibility guidelines, a same-industry acquisition may sometimes be structured with little to no additional equity injection, depending on cash flow strength and overall deal structure.
A business that is currently leasing space may be able to purchase its building with minimal equity injection, provided SBA occupancy requirements are met and cash flow supports the debt.
SBA loans can also be used in certain cases to refinance burdensome debt, improving cash flow when eligibility and SBA refinancing rules are satisfied.
WHEN SBA 7(a) IS THE RIGHT TOOL
SBA 7(a) financing works best when a transaction depends more on sustainable future cash flow than on hard collateral. It is especially effective for acquisitions, partner buyouts, and expansion projects where longer amortizations can significantly improve debt service coverage.
Because SBA programs are designed to support business growth and stability, they often provide a level of leverage and flexibility that is difficult to match with conventional financing.
HOW OUR SBA EXPERTISE MAKES A DIFFERENCE
Our SBA advisory work is grounded in direct lending experience dating back to 2014, combined with deep working knowledge of SBA Standard Operating Procedures. Your financing strategy is built around how SBA lenders actually underwrite and approve loans.
We regularly structure SBA transactions that involve projection-based underwriting focused on future cash flow, thoughtful use of seller notes to potentially strengthen equity injection and debt service coverage, and cash flow driven approvals rather than collateral alone. We also prepare SOP-aligned packages that anticipate documentation, eligibility, and compliance requirements before submission.
In more complex transactions, multiple seller notes may be layered within the capital structure, including forgivable or performance-based structures when permitted, to help address issues such as customer concentration, declining revenues, or other perceived credit weaknesses.
At its core, SBA underwriting asks a straightforward question. Can the business reasonably support the proposed debt based on realistic forward-looking cash flow? We structure transactions to clearly answer that question.
INSTITUTIONAL SBA LENDING PERSPECTIVE
Flexible Capital Solutions is led by Mark Nichols, Vice President and Business Development Officer in SBA Lending at a leading national SBA lending institution. This provides clients with insider understanding of how SBA credit teams evaluate risk, real-world insight into loan structure and approval dynamics, and guidance based on daily involvement in SBA lending decisions.
When a transaction aligns with that institution’s credit profile and program focus, that path is evaluated first as it can offer an efficient and well-coordinated approval process.
Regardless of lender, this background ensures financing requests are prepared in a way that aligns with how SBA credit teams evaluate and approve loans.
ACCESS TO MULTIPLE SBA LENDING CHANNELS
Every SBA lender has a slightly different credit culture, industry comfort level, and structuring flexibility. While we begin by assessing fit with the SBA lending platform where our leadership is actively involved, some transactions may be better suited to another institution’s credit appetite.
Because of longstanding relationships across the SBA lending community, we can help identify alternative lending partners when appropriate, ensuring borrowers are not limited to a single credit perspective while still benefiting from experienced, responsible guidance.
COMMON SBA DEAL KILLERS IDENTIFIED EARLY
Some challenges are difficult to overcome, including prior federal loan losses by an owner, (SBA, FHA, Student Loans, etc.) a spouse unwilling to allow a required personal residence lien, or business types that fall outside SBA eligibility guidelines. These issues are identified early so time is not wasted pursuing an unworkable path.
SBA 504 LOANS
The SBA 504 program helps business owners acquire, construct, or improve owner-occupied commercial real estate and major fixed assets. This is a long-term fixed-asset financing tool, not a working capital program.
WHEN SBA 504 IS THE RIGHT TOOL
The 504 program is most effective when a project is primarily real estate or equipment driven and the borrower wants long-term fixed rates with lower equity than many conventional loans. It is ideal for businesses that want to control occupancy costs and build equity over time.
ELIGIBLE USES OF PROCEEDS
- Purchase of owner-occupied commercial real estate
- Ground-up construction or building expansion
- Renovations and major improvements
- Long-life machinery and heavy equipment
- Refinance of eligible commercial real estate debt, including certain SBA 7(a) loans
- The operating business must generally occupy at least 51 percent of an existing building or 60 percent of a new construction project.
HOW THE 504 STRUCTURE WORKS
A typical structure includes a bank providing 50 percent of the project cost, the SBA Certified Development Company providing 40 percent, and the borrower contributing 10 percent.
EQUITY INJECTION VARIATIONS
Startups may require 15 percent down. Special-use properties may require 20 percent down. If the project is both a startup and special use, 25 percent down may be required.
WHY BUSINESS OWNERS CHOOSE SBA 504
Long-term fixed rates, lower down payments than conventional loans, no balloon payment on the SBA portion, and the ability to build equity while preserving working capital.
USDA BUSINESS AND INDUSTRY LOANS
For businesses in rural and certain suburban communities, USDA Business and Industry loans can be a powerful alternative to SBA financing, especially for larger or more complex projects.
WHEN USDA IS THE RIGHT TOOL
The USDA B&I program can be particularly useful when a project falls outside SBA eligibility, especially due to occupancy requirements. It can also support larger transactions in markets where traditional bank leverage may be limited.
PROGRAM HIGHLIGHTS
- Loan sizes up to 25 million dollars
- Long-term financing, often up to 30 years, for real estate, equipment, and acquisitions
- Loan must be fully secured with collateral
TYPICAL USES OF PROCEEDS
- Commercial real estate purchase, construction, or improvement
- Machinery and equipment
ACCOUNTS RECEIVABLE FINANCING
Accounts receivable financing provides working capital based on money customers already owe your business, without long-term debt.
WHEN A/R FINANCING IS THE RIGHT TOOL
This type of financing works best for growing companies that are profitable but constrained by cash flow timing. It can support expansion and/or mitigate slowing paying customers, but it is not intended to solve fundamental profitability issues.
HOW IT WORKS
You draw funds based on outstanding receivables. Interest is charged only on the amount used. Borrowing capacity replenishes as customers pay.
WHAT MAKES THIS DIFFERENT
- No long-term contract
- No monthly minimum usage
- No invoice tracking fees
- No hidden charges
TYPICAL COST RANGE
Larger, well-established companies may see single-digit annualized rates. Mid-sized firms often see lower double-digit rates. Smaller or higher-risk borrowers may see mid- to upper-teen rates. Because interest is charged only on outstanding balances, businesses maintain control over total financing cost.
HOW WE ARE COMPENSATED
Flexible Capital Solutions provides independent financing advisory and structuring support. In many cases, lenders may pay a referral or advisory fee when a transaction closes, allowing our guidance to be provided without upfront cost to the client.
When a loan is placed with the SBA lending institution where our principal serves as a Vice President and Business Development Officer, Flexible Capital Solutions does not receive a referral fee from that lender.
SBA 504 transactions and certain specialty programs may involve different compensation structures, which are discussed openly with clients.
Our role is always to help identify the financing structure that best aligns with the borrower’s needs, regardless of funding source.
