When you’re looking to finance a business acquisition, you’ve got two solid paths: an SBA loan or a conventional loan. Each has its own vibe—different costs, timelines, and rules—so picking the right one depends on your situation. To give you a clear picture, let’s use a $5 million acquisition over 10 years as an example and compare how they play out. No number-crunching overload here—just the real talk you need to decide, with Duneland Financial in your corner.

The Setup: A $5 Million Example

Say you’re buying a $5 million business, and you’re borrowing the full amount over 10 years. For an SBA loan, picture an interest rate of 10.5% (today’s prime rate of 7.5% plus 3%) and a 2% origination fee from us as your broker. For a conventional loan, it’s 8% (prime plus 0.5%) with a 6% origination fee from our underwriters. These are starting points—your deal might shift—but they’re perfect for seeing how things stack up.

The Costs: What You’d Pay

Let’s dive into the dollars for this $5 million scenario.

• SBA Loan:
  Your monthly payment would be about $67,467. Over 10 years, that’s roughly $8.1 million total, including $3.1 million in interest. Add the $100,000 origination fee (2% of $5 million), and you’re at $8,196,014 all in.
• Conventional Loan:
  Here, the monthly payment drops to around $60,758. Over 10 years, you’d pay about $7.3 million, with $2.3 million in interest. Toss in the $300,000 origination fee (6% of $5 million), and the total is $7,591,001.

In this example, the conventional loan saves you about $605,000 over the decade. The upfront fee’s higher—$300,000 vs. $100,000—but that 8% interest rate (versus 10.5%) keeps your long-term costs down. It’s like paying more upfront for a better deal later.

The Trade-Offs: SBA Rules vs. Conventional Ease

Cost is one piece—how you get there matters too. SBA loans have some extra steps, while conventional loans keep it smoother. Here’s the breakdown:

• Source of Funds:
  SBA loans need your cash—like a down payment—“seasoned” for 90 days, sitting in your account to prove it’s yours. Conventional loans just ask for proof of funds—no waiting. If your money’s ready now, conventional gets you moving faster.
• Closing Time:
  SBA loans can take 90 to 120 days—or more—thanks to government approvals. Conventional loans? We’re talking about 60 days. Speed can be everything in a hot deal.
• Extra Restrictions:
  SBA loans come with more hoops—extra paperwork, tighter rules on fund use. Conventional loans cut through that quicker, assuming your finances line up.

A Quick Side-by-Side (for $5 Million)

Our Take at Duneland Financial

At Duneland Financial, we’re not here to bash SBA loans—they’re a fantastic option, and we offer them ourselves! They’re perfect for folks who don’t qualify for conventional financing, giving small businesses a shot with that government backing. But here’s what’s happening in our world: there’s an overreliance on SBA loans out there. We see too many prime credit candidates—people with great credit who’d easily qualify for a conventional term loan—getting pushed into SBA deals instead. That can mean higher costs and slower timelines when you don’t need them. We’re here to set that straight, offering both SBA and conventional options so you get what fits best.

What This Means for You

In our $5 million example, conventional comes out cheaper by over half a million bucks, closes faster, and skips the extra hoops. If your credit’s strong, that could mean more cash in your pocket and a quicker start with your new business. But if conventional’s not in the cards, our SBA lending can step in to make it happen. Your acquisition might not be $5 million, but the idea’s the same: we’ll match you with the right loan for your goals. Stick with us at Duneland Financial—we’ll crunch the numbers and walk you through it!