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SBA Loans

The U.S. Small Business Administration (SBA) offers a variety of loan programs designed to support small businesses in obtaining the funding they need to start, grow, or sustain their operations. SBA loans are not directly issued by the government; instead, they are provided by participating lenders, such as banks and credit unions, with a portion of the loan guaranteed by the SBA. This guarantee reduces the risk for lenders, making it easier for small businesses to qualify for financing. The most common types of SBA loans include the 7(a) Loan Program, which offers flexible funding for various business needs, and the 504 Loan Program, which provides long-term, fixed-rate financing for major fixed assets like real estate and equipment.

One of the key benefits of SBA loans is their competitive terms, which often include lower interest rates and longer repayment periods compared to conventional loans. Additionally, SBA loans may require lower down payments and offer more flexible overhead requirements, making them accessible to a wider range of businesses. These loans can be used for a variety of purposes, including working capital, inventory purchases, equipment acquisition, and refinancing existing debt. To qualify, businesses generally need to meet certain size standards, demonstrate the ability to repay the loan, and have a sound business purpose. Overall, SBA loans are a valuable resource for small businesses seeking to secure the funding necessary for growth and success.

One of the key benefits of SBA loans is their competitive terms, which often include lower interest rates and longer repayment periods compared to conventional loans

The information provided serves as a general guideline. We collaborate with a diverse range of lenders, each offering unique terms and benefits.

To ensure you find the best financing solution tailored to your specific needs, we recommend setting up a meeting with us to review all your options in detail.

SBA Loans

  • Credit Score Minimum:  650
  • Income Minimum:  $250,000 annually 
  • Debt to Income:  Sufficient to service all debt payments
  • Application: Our general application to start the process. Depending on which lender ends up being the best fit, we may need to submit a lender specific application. View Application
  • Credit Report: Three bureau with fico scores. Learn How!
  • Bank Statements: Last six months
  • Tax Returns: Last two years
  • Business Debt Schedule
  • Government Guarantee: The SBA guarantees a portion of the loan, reducing the risk for lenders and making it easier for small businesses to qualify for financing.
  • Competitive Terms: SBA loans often come with lower interest rates and longer repayment terms compared to conventional loans. This can result in lower monthly payments and more manageable debt.
  • Flexible Use of Funds: These loans can be used for a wide range of business purposes, including working capital, purchasing inventory, acquiring equipment, refinancing existing debt, and even buying real estate.
  • Lower Down Payments: SBA loans typically require lower down payments, which can be beneficial for businesses that need to preserve cash flow.
  • Support for Small Businesses: The SBA has specific programs designed to support small businesses, including those owned by women, veterans, and minorities. These programs can provide additional resources and support.
  • Eligibility Criteria: While there are specific eligibility requirements, such as size standards and the ability to repay the loan, the SBA’s criteria are often more flexible than those of traditional lenders.
  • Character Evaluation: The SBA conducts a character evaluation for applicants, which includes a review of personal history and criminal background. This ensures that the business owners are of good character.
  • Loan Amounts:  $50,000 to $500,000
  • Interest Rate:  Prime + 2.75% to 6.5%  depending on credit and other underwriting guidelines.  
  • Term:  Up to 10 years
  • Fees:  Vary by lender depending on credit and other underwriting guidelines
  • Credit Reporting:   Vary by lender, but most do not report to personal credit.
  • Funding Time:   7 days to 3 months
  • Collateral Required:  All business assets.

 

*We strive to keep our information current, but the lending landscape changes daily, and requirements can vary between lenders. The information provided is intended as a guideline to begin the approval process. Additional information, documents, and requirements may be needed.

Frequently Asked Questions (FAQs) About SBA Loans

An SBA loan is a loan provided by participating lenders, such as banks and credit unions, and partially guaranteed by the U.S. Small Business Administration (SBA). This guarantee reduces the risk for lenders, making it easier for small businesses to obtain financing.

The SBA offers several loan programs, including:

  • 7(a) Loan Program: The most common, used for working capital, equipment purchase, and real estate.
  • 504 Loan Program: For purchasing fixed assets like real estate or equipment.
  • Microloan Program: Provides small loans up to $50,000 for startups and small businesses.
  • Disaster Loans: For businesses affected by declared disasters.

Eligibility varies by loan program, but generally, businesses must:

  • Operate for profit.
  • Be small, as defined by SBA size standards.
  • Be located in the U.S.
  • Have reasonable owner equity to invest.
  • Have exhausted other financing options.

To apply for an SBA loan, follow these steps:

  • Prepare your business plan: Include financial statements and projections.
  • Complete the application: Provide necessary documentation, such as tax returns and financial statements.
  • Submit the application: Work with your lender to submit the application to the SBA.

Interest rates and terms vary by loan program:

  • 7(a) Loans: Rates are typically variable and based on the prime rate plus a margin. Terms can be up to 25 years for real estate.
  • 504 Loans: Fixed rates for the SBA portion, with terms up to 25 years.
  • Microloans: Rates vary by lender, with terms up to 6 years.

The time to process an SBA loan can vary. Standard 7(a) loans typically take several weeks to a few months. SBA Express loans, which offer expedited processing, can take as little as 36 hours for approval.

SBA loan funds can be used for various business purposes, including:

  • Working capital
  • Purchasing inventory or equipment
  • Buying real estate
  • Refinancing existing debt
  • Funding renovations or expansions

If you default on an SBA loan, the lender will work with you to find a solution, such as restructuring the loan. If the loan cannot be repaid, the SBA will cover the guaranteed portion, but you may still be responsible for the remaining balance.

Yes, there are fees associated with SBA loans, including:

  • Guarantee fees: Based on the loan amount and term.
  • Servicing fees: Ongoing fees for loan servicing.
  • Packaging fees: Fees for preparing the loan application.

While having good credit improves your chances, it is possible to get an SBA loan with bad credit. Lenders will consider other factors, such as your business plan, cash flow, and collateral.

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