SBA & Government

The SBA offers several loan programs. Here's what you need to know:

SBA 7(a) Loan Program The most common SBA loan

Details:

• ●Amount: Up to $5,000,000
• ●Terms: Up to 25 years (real estate), 10 years (equipment), 7 years (working capital)
• ●Rates: Prime + 2.25% to Prime + 4.75%
• ●Down payment: 10-20%

Best For:

• ●Working capital
• ●Equipment purchases
• ●Business acquisition
• ●Debt refinancing
• ●Real estate (owner-occupied)

SBA 504 Loan Program For real estate and major fixed assets

Details:

• ●Amount: Up to $5,500,000
• ●Terms: 10, 20, or 25 years
• ●Structure: 50% bank, 40% CDC, 10% borrower
• ●Fixed rate on CDC portion

Best For:

• ●Purchasing real estate
• ●Building construction
• ●Large equipment with long useful life

SBA Express Faster version of 7(a)

Details:

• ●Amount: Up to $500,000
• ●SBA turnaround: 36 hours
• ●Higher guaranty fee
• ●Same uses as 7(a)

Best For:

• ●When you need SBA benefits faster
• ●Smaller loan amounts

SBA Microloan For small funding needs

Details:

• ●Amount: Up to $50,000
• ●Terms: Up to 6 years
• ●Through non-profit intermediaries
• ●Often includes technical assistance

Best For:

• ●Startups
• ●Very small businesses
• ●Businesses needing mentorship

General Requirements (All SBA):

• ●2+ years in business (flexible for some)
• ●680+ credit score
• ●US-based, for-profit business
• ●Reasonable owner equity
• ●No defaults on government debt

SBA loans have the strictest requirements but best terms. Here's what you need:

Basic Eligibility:

• ●For-profit business
• ●Operate in the US
• ●Owner has invested equity
• ●Used other financing options first
• ●Not delinquent on government debt
• ●Meet SBA size standards for your industry

Credit Requirements:

• ●Personal credit: 680+ (some lenders want 700+)
• ●No recent bankruptcies (2+ years discharged)
• ●Clean personal financial history
• ●No outstanding tax liens

Business Requirements:

• ●2+ years in business preferred
• ●Profitable or clear path to profitability
• ●Strong cash flow
• ●Good industry outlook
• ●Reasonable existing debt level

Documentation Needed:

• ●Personal tax returns (3 years)
• ●Business tax returns (3 years)
• ●Personal financial statement (SBA Form 413)
• ●Business financial statements
• ●Business plan (for newer businesses)
• ●Resume of owner(s)
• ●Business licenses and permits
• ●Lease agreements
• ●Collateral documentation

Collateral:

• ●Required for loans over $25,000
• ●Real estate, equipment, inventory
• ●Personal guarantees from 20%+ owners
• ●SBA will not decline solely for lack of collateral

Industry Restrictions: Some industries are ineligible:

• ●Gambling
• ●Lending/investment
• ●Multi-level marketing
• ●Political lobbying
• ●Some others (check SBA list)

Timeline:

• ●Application: 2-4 weeks to prepare
• ●Bank review: 2-4 weeks
• ●SBA approval: 5-10 business days
• ●Closing: 1-2 weeks
• ●Total: 6-12 weeks typical