SBA Loans
The Small Business Administration exists to help small businesses get a leg up when they need financial help. Use an SBA loan to fund the purchase of a new workspace, build a new office, get new equipment on board, or meet daily expenses. Why compete with multinational corporations for financing on their terms when you can meet your small business needs with an SBA loan?
What are SBA Loans?
Lenders often hesitate to loan to small businesses. Small businesses are seen as a risk for lenders because of their short credit history, variable cash flow or limited collateral assets. Because a small business may not borrow as much as a large corporation, the lender can’t make as much profit from the same effort. To give lenders added security, the SBA acts as a cosigner on the loan.
While you can’t apply for financing directly from the SBA, there are Certified Development Companies and qualified private lenders that will take your application. Depending on the type of SBA loan you want, a portion of the full loan amount is guaranteed by the SBA. The rest of the loan comes from another private lender and the borrower’s down payment.
SBA 7(a) and the SBA 504 loans are two different ways to finance your small business. Both will cover the costs of real estate, construction, equipment, and refinancing. The SBA 7(a) also offers a way to get working capital. The choices can seem overwhelming, but we know SBA loans inside and out. We’ll partner you with a knowledgeable, certified lender and help you through the application process.
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Income
To qualify for SBA-backed financing, your company must have less than $5M in net annual income and less than $15M in net worth. This keeps the big companies from outcompeting startups and “mom and pop” establishments for loans. When the big banks say no, look to SBA funding to get what you need.
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Type
For-profit small businesses in the United States can qualify for SBA loans, but not all types of businesses are eligible. The SBA won’t back funding for casinos, churches, lenders, real estate companies, or non-profit organization. Ask your broker for a full list of restrictions.
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Owners
In addition to the business itself, SBA lenders look at the owners of the business. To be eligible for financing, the owner can’t be on parole or in default on federal debt. The owner also has to show that they’ve invested their own money into the business and have applied to other lenders.
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F.A.Q.’s
Q. Is it hard to qualify for an SBA loan?
The SBA does have some eligibility requirements that can seem daunting to business owners. But, it’s not as hard to qualify as you might think. We can help you successfully navigate the application process and find a lender that suits your needs.
Q. What’s the difference between SBA 7(a) and 504 loans?
The main difference between these two SBA loans is that the 7(a) can be used for working capital and the 504 cannot. 504 rates are fixed while 7(a) rates can be either fixed or variable. 504 loans come from a Certified Development Company and 7(a) loans can come from banks or private lenders. Contact your broker for more details.
Q. What are the interest rates on SBA loans?
The answer to that depends on your loan type. The SBA does put a cap on how much lenders can charge in interest, but that amount varies. Rates are based on the Prime Rate and as of 2021 are between 4.5% and 6.5%. To get rates for your specific loan needs, contact us today.
Q. Why go to the SBA for a loan?
SBA loans work for businesses that have tried to get loans from other lenders but were considered too much of a risk. To be eligible, you must have exhausted other resources, including personal investments. So, these loans can be the last stop for businesses that need help.
Get approved if you’ve been turned down by other lenders.
No competition from non-profits or huge corporations.
Finance up to $5M or more for your business.
Low down payments.
No competition from non-profits or huge corporations.
Finance up to $5M or more for your business.
Low down payments.
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