A business might operate in a quiet corner of town, yet eco-conscious customers will still seek it out. Do you know why? It’s because sustainable business practices are now a major selling point among consumers.
Sustainable business practices show customers a business’s commitment to caring for the environment. That is why there has been a major shift toward sustainability.
However, adopting sustainable business practices requires a financial investment, something most SMEs don’t have in abundance. Fortunately, that is where SBA 7(a) loans come in.
We’ll explore six ways SBA7(A) loans can support sustainable business practices. First, why SBA7(a) loans? Are they any different from other business loan options?
Why Choose SBA 7(a) Loans Over Other Financing Options?
You might say, ‘I have other loan options.’
Yes, you may have other business loan options. However, SBA 7(a) loans stand out as financing for small businesses because you can use the loan to cover various business costs and ventures, including adopting sustainable business practices.
For example, you can buy new eco-friendly equipment, upgrade your facilities to the highest environmental standards, or use the funds as working capital. Moreover, SBA 7(a) loans have lower interest rates, which makes long-term sustainability initiatives more affordable.
Businesses don’t always take off, and worrying about paying a loan can be immensely stressful. With SBA7(a), you get extended repayment periods, which can give your business the time it needs to stabilize.
You’re also probably thinking, ‘But I have a lower credit score. Can I still get this type of financing?’ The answer is yes! SBA 7(a) loans are advantageous because since the government guarantees part of this loan, lenders are more inclined to offer loans even to clients with poor credit scores.
Let’s focus on how SBA7(a) loans can support sustainable business practices.
5 Ways SBA 7(a) Loans Can Support Sustainable Practices
1. Funding the Transition to Sustainable Supply Chains
Switching to eco-friendly business practices often means working with new suppliers or business partners. In most instances, this means paying upfront fees for the supplies. SBA 7(a) loans can make this switch easier by helping businesses cover these costs.
Consider a retail business that decides to start using sustainable packaging. With an SBA 7(a) loan, they can source biodegradable materials and negotiate bulk purchase contracts without disrupting cash flow.
2. Investing in Energy-Efficient Equipment
Eco-consciousness also means upgrading to energy-efficient equipment. SBA 7(a) loans can help fund significant investments, such as replacing outdated machinery with ENERGY STAR-rated appliances, installing high-efficiency HVAC systems, or installing solar panels.
For example, a manufacturing business that switches to energy-efficient machines can lower its energy consumption by up to 30%, improve profit margins, and meet environmental standards.
3. Developing Eco-Friendly Products or Services
SBA 7(a) loans can provide businesses with the resources to ideate and launch new eco-friendly products.
For instance, a business might use the funds to design products from recycled materials or explore biodegradable alternatives to existing products. This initiative could position businesses as industrial leaders and such products might turn a considerable profit while staying true to the sustainability cause.
4. Upgrading Facilities for Sustainability
According to the UN Environment Programme (UNEP), buildings and constructions account for about 40% of global energy-related carbon emissions. That calls for a few renovations in most business premises.
SBA 7(a) loans can fund renovations such as adding eco-friendly insulation, upgrading windows to reduce heat, or installing water-saving fixtures such as low-flow toilets and faucets. These upgrades can enhance the workplace environment, lead to more satisfied employees, and improve overall productivity.
5. Enhancing Waste Management Practices
Most businesses don’t pay much attention to what happens to their waste materials after they leave their premises. However, that is a top concern for sustainable businesses.
SBA 7(a) loans can fund the installation of state-of-the-art recycling equipment or invest in technologies that minimize production waste. For example, a restaurant chain could use SBA 7(a) funds to purchase a large, ENERGY STAR-rated freezer and redirect the surplus food to charities. This would improve public perception and attract customers who value responsible practices.
Closing Thoughts
With SBA 7(a) loans, small businesses have a financial partner in creating a lasting impact on both their operations and the planet. Now is the time to seize this opportunity and lead the charge toward sustainable business practices.
