SBA 7(a) and C&I Financing: Finding the Right Fit for Your Business

Expert Insight from Joe Veliz, Vice President, Commercial Banker

Growth can create exciting opportunities for a business, but it can also bring new financial needs. Whether you’re purchasing equipment, investing in real estate, strengthening working capital, or preparing for your next stage of growth, the right financing can help you move forward with confidence.

Joe Veliz, Vice President, Commercial Banker at Highland Bank, works with business owners to understand where they are today, where they want to go, and which financing option may best support that path.

Two Financing Paths, One Goal: Moving Your Business Forward

SBA 7(a) and conventional commercial and industrial (C&I) financing can support many of the same business needs, but the right fit often depends on a company’s financial position, history, collateral, cash flow, and plans for growth.

SBA 7(a) financing offers flexibility for a variety of business purposes, including equipment purchases, working capital, real estate, and other investments. It can be especially valuable for growing businesses with a strong opportunity ahead that may not yet fit traditional lending parameters.

As an SBA Preferred Lender, Highland Bank has experience helping business owners navigate SBA financing and determine when it may be the right fit for their goals. From Joe’s experience, rapid growth can put pressure on cash flow or create financing needs that exceed the collateral a business has available. In situations like these, SBA financing may provide an additional path forward while helping the business preserve more of its available capital.

Conventional C&I financing is often a strong option for established businesses with consistent historical performance and demonstrated cash flow. It can support equipment and vehicle purchases, property improvements, working capital needs, and lines of credit.

Ultimately, one option isn’t necessarily better than the other. Joe shares that the goal is to understand the business and determine which financing structure makes the most sense for its financial position and what they want to accomplish.

The Numbers Matter. So Does the Story Behind Them.

Financial statements are an important part of any lending decision, but they don’t always tell the complete story of a business.

For SBA financing, the conversation may focus more on where a company is headed and what it needs to support its continued growth. With conventional C&I financing, historical performance and consistent cash flow may play a larger role in demonstrating the company’s ability to take on additional debt.

In either case, transparency matters. An unusual year, temporary challenge, or period of significant growth may require additional context. Joe encourages business owners to be open with their banker about what happened, why it happened, and how the business responded. That context can help create a clearer picture of the company and lead to more productive conversations about financing.

Looking Beyond Common Financing Misconceptions

One common misconception about SBA 7(a) financing is that it is significantly more complicated than conventional financing. While SBA loans have additional program requirements, much of the financial information needed is similar to what a bank would review for a conventional commercial loan.

SBA financing also doesn’t mean a business will always need SBA support. As a company grows, strengthens its financial position, and establishes a longer track record, conventional financing may become an option for future needs.

There can also be misconceptions around the conventional lending process, particularly when it comes to how quickly financing can come together. Regardless of the financing path, having current, accurate financial information available and starting the conversation early can help business owners better understand what will be needed and prepare for the process ahead.

Your Best Financing Strategy Starts Before You Need It

One of Joe’s most important pieces of advice for business owners is simple: don’t wait until you need financing to talk with your banker.

He recommends starting the conversation early when you’re considering a significant investment or growth opportunity. This gives you time to understand your options, identify potential challenges, and prepare the financial information you’ll need. Involving your accountant and attorney when appropriate can also help ensure everyone is working toward the same goals.

At Highland Bank, commercial banking starts with understanding your business, where it stands today, and where you want to take it next. Whether SBA 7(a), conventional C&I financing, or another solution may be the right fit, our team can help you explore your options and prepare for what’s ahead.

Planning your next move? Connect with Joe Veliz and the Highland Bank commercial banking team to explore financing options that support your business goals.