Roger DaSilva
6.4K posts

Roger DaSilva
@RogerDaSilva1
Owner Realm Business & Tax Advisory Tax prep/Planning, Outsourced CFO, Bookkeeping for startups & SMBs @realm_tax (formerly @realmstartup)






I'm going to go through the process of using a Pledge Asset Line (PAL) at Schwab to pay off my entire 7a SBA loan this week. Over 200bps of savings on the interest rate, no personal guarantee and interest only. Note that I'm doing this in year 4 of business ownership after having paid off close to 7 figures of SBA debt in 3 years with $450k capacity on my undrawn line of credit with mid 6 figures of cash in business checking. Several hundred thousands of free cash flow per year will be freed up immediately. This whole process started from a question on X from @SBAdealCloser. Box spread loans could be cheaper but the higher maintenance of structuring and having to repay principal at times just made me push to PAL structure for simplicity. I will continue to pay down principal of debt each year but no longer will have to pay $15k each month as required by the current SBA loan schedule. I appreciated the balanced discussion on X from others and got feedback from other business owners that know the situation in more detail. What others said (most seem to push for complete payoff of 7a): 1) Another SMB manufacturing owner (ex banker, ex tech W2) => he recommended I just refinance my SBA debt with another SBA loan or conventional debt. He thought I should preserve debt capacity down the road with PAL option should I want to buy a home, etc. He isn't a fan of interest only as he think it's smart to pay down debt every year. Fair points 2) Another SMB manufacturing owner (ex banker) => he was in the camp to pay off the entire 7a with PAL; he is in the process of buying the building he operates in from his seller and isn't considering a PAL to help fund the equity check or finance the deal currently as most of his liquidity is in cash or 401k 3) Former Morgan Stanley banking analyst colleague now entrepreneur owning healthcare practices, agricultural assets and real estate => pay off entire 7a with PAL unless I had other bigger uses of capital where he recommend I use the PAL to start another business, do an acquisition 4) Former banker now SMB owner in lab testing biz => pay off entire 7a with PAL x.com/blueprintsmb22…
























