Small Business Administration (SBA) Loans
We understand the unique challenges you face as a Small Business Owner. And we’re proud to be the lending partner for so many small businesses in this area. In conjunction with the U.S. Small Business Administration (SBA), we offer a variety of financing options that may meet your specific needs and SBA program guidelines, including the 7(a) and CDC/504 programs.
What is an SBA Loan?
An SBA loan is a small business loan guaranteed by the U.S. Small Business Administration. This guarantee to banks and lenders protects their interests by promising to pay a portion of the loan back if the business owner defaults on the loan. When a business applies for an SBA loan, it is actually applying for a small business commercial loan through a bank or authorized SBA lender, and structured according to SBA requirements. Essentially, an SBA loan alleviates the risk associated with lending to business owners who may not qualify for conventional commercial loans.
Why Choose an SBA loan over other options?
There are several benefits of choosing SBA loan financing over traditional commercial loans. Typically, traditional conventional business loans can be harder to obtain, as they have various collateral requirements, shorter loan terms requiring higher payments, require higher down payments, and require companies to be financially strong with little to no weaknesses.
SBA loans were created specifically for small businesses, as SBA loans come with longer repayment terms, smaller down payments, can have limited available collateral, available to businesses with uneven earnings performance, higher risk industries, and business start-ups or projection-based financials.
What can you use an SBA loan for?
An SBA loan can be used for a number of things including working capital, equipment, machinery, furniture and fixtures, real estate, revolving fund needs, and refinancing existing debt.
Who is eligible for an SBA loan?
There are some requirements that small businesses have to meet. Here is a list of high-level requirements from the SBA. To qualify you must:
- Operate for profit
- Be small (as defined by the SBA)
- Do business in the U.S.
- Demonstrate a need for the loan
- Use money for a business purpose
- Not be delinquent on existing debt with the U.S. Government
- Have reasonable invested equity
- If necessary, be willing to pledge personal assets
SBA Loan Programs
7(a) Loan Program
Term loans and lines of credit up to $5 million for the purposes of purchasing assets, refinancing, and working capital needs. The SBA will guarantee loans up to 85% on loans under $150,000, and up to 75% on loans over that amount.
SBA Express Loan
Term loans and lines of credit up to $350,000 for the purposes of purchasing assets, refinancing, and working capital needs. The SBA will guarantee loans up to 50% for the lender.
504 Loan Program
Term loans up to $5 million for the specific purposes of industrial or commercial building purchases or expansion, and the purchase of equipment. Small businesses need to meet certain job creation criteria. 504 loans are issue through a partnership with Certified Development Companies (CDC) and private sector, third party lenders. CDC’s are non-profit corporations certified and regulated by the Small Business Administration to package, process, close, and service 504 loans.
All financing is subject to credit approval.