Should we be using SBIC?

searcher profile

July 11, 2023

by a searcher from The University of Auckland - The University of Auckland Business School in Los Angeles, CA, USA

Just wanting to confirm that SBA 7(a) (and 504) should be preferred over SBIC, and if so why?

Also, can SBIC lend to non-US citizens?

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commentor profile
Reply by an investor
from Harvard University in 150 Washington Ave #201, Santa Fe, NM 87501, USA
These are totally different products/lenders. SBICs typically lend to larger (but still "small") businesses compared to 504 SBA lenders. With SBIC leverage, the interest rate is much higher, but there is more debt available and no personal guarantee. Repayment terms can also be more favorable with SBICs (i.e. a cash flow sweep as opposed to fixed amortization).
commentor profile
Reply by an investor
from University of Missouri in Austin, TX, USA
SBA and SBIC lenders have a very different offering. SBICs will typically be used for much larger deals and can provide both debt and equity. They are also typically geared more towards a professional or institutional investor.

Both are great options depending on your situation.
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