Get an SBA 7(a) Loan for Your Small Business!
Each year, thousands of American business owners and entrepreneurs get funding from the U.S. Small Business Administration (SBA) in order to maintain or expand their businesses. In fact, in 2019, the SBA guaranteed more than $23 billion in loans via its flagship SBA 7(a) loan program, which offers loans up to $5 million with fixed and variable-rate terms up to 25-years. General terms include:
Size: Can provide up to $5 million of capital for small businesses
Rates: The majority of 7(a) loans have interest rates between 5.5% and 8.0% (as of December 2020)
Term: Have loan terms of up to 10 years for working capital and 25 years for real estate
Uses: Purchasing a business, buying real estate, buying out a partner, equipment fiance or leasing, refinancing higher-interest business debt
Timing: Most 7(a) loans can be approved in 1-10 days, but may not be funded until 45-90 days after the initial application
Credit: Most lenders prefer a FICO score of 680+
Collateral: The majority of 7(a) loans necessitate a 10% to 20% down payment, plus additional collateral (generally at the lender’s discretion)
Industry Requirements: In order to qualify, a business must be in an SBA-eligible industry, and must not be in an ineligible industry
Reasonable Financing Test: To qualify for an SBA loan, a business must have tried and failed to achieve financing elsewhere at a reasonable rate
Close Faster With An SBA Express Loan!
The SBA Express Loan is actually a variant of the 7(a) program. However, Express Loans are designed to close far more quickly— and with far less paperwork, than a traditional 7(a) loan. Due to the reduced documentation requirements, these loans are limited to $350,000. However, on the upside, you can receive funds as a few as 30 days after application— which is pretty impressive for a government-guaranteed loan.
Size: Can provide up to $350,000 of capital for small businesses
Rates: Generally identical to 7(a) loans
Term: Have loan terms of up to 10 years for working capital and 25 years for real estate
Uses: Purchasing a business, buying real estate, buying out a partner, equipment fiance or leasing, refinancing higher-interest business debt
Timing: Most Express Loans are approved in 1-10 days, but may not be funded until 30-90 days after the initial application
Credit: 600-640+ minimum, 680-700+ to access maximum loan proceeds
Collateral: The majority of 7(a) loans necessitate a 10% to 20% down payment, plus additional collateral (generally at the lender’s discretion)
Industry Requirements: In order to qualify, a business must be in an SBA-eligible industry, and must not be in an ineligible industry
Reasonable Financing Test: To qualify for an SBA loan, a business must have tried and failed to achieve financing elsewhere at a reasonable rate
SBA 504 Loans for Commercial Real Estate
SBA 7(a) loans are a great source of funding if you need to purchase a smaller commercial property or need working capital for your business. But what if you want to purchase (or build) a large commercial property for your business? What if you need to finance heavy equipment? The SBA 504 loan has you covered, and with rates currently hovering as low as 2.49%, you’re basically being catered to. Terms include:
Size: Can provide up to $5 million of capital for small businesses, up to $5.5 million for certain energy projects
Rates: The majority of 504 loans have interest rates between 2.49% – 3.22% (as of February 2021)
Term: Have loan terms of up to 10 years for working capital and 25 years for real estate
Uses: Purchasing a business, buying real estate, buying out a partner, equipment fiance or leasing, refinancing higher-interest business debt
Timing: Most 504 loans can be approved in 1-10 days, but may not be funded until 45-90 days after the initial application
Credit: Most lenders prefer a FICO score of 680+
Collateral: The majority of 504 loans necessitate a 10% to 20% down payment, plus additional collateral (generally at the lender’s discretion)
SBA Microloans
The SBA provides fantastic opportunities for small business owners to get low-cost capital. But what if your business is really small? If this describes you, then an SBA microloan could be an incredible choice. Unlike SBA 7(a) loans, microloans have less stringent credit requirements, which may be ideal for newer business owners.
Size: Can provide up to $50,000 of capital for small businesses
Rates: Generally 7.50- 13.0%
Term: Have loan terms of up to 6 years
Uses: Purchasing a business, buying real estate, buying out a partner, equipment fiance or leasing, refinancing higher-interest business debt
Timing: Loans generally close in 30 days or less, but timelines vary from lender to lender
Credit: Principal borrower generally needs a FICO score of 575+, however, lower-credit borrowers generally need to provide personal guarantees and may even need co-guarantors.
Collateral: Depending on credit score and other factors, borrowers may also need to put down collateral, such as business equipment or a vehicle, in order to further secure their loan in the eyes of their lender and the Small Business Administration.