SBA LOANS
WE OFFER THREE TYPES OF SBA LOANSAn SBA LOAN is a business loan guaranteed by the U.S. Small Business Administration. Contrary to popular belief, the SBA does not actually lend directly. Rather, the SBA establishes guidelines for participating lenders and guarantees a portion of the loan, up to 85%, which lessens the risk for the lender, and increases the likelihood of approval.
7(a)
WHAT YOU NEED TO KNOW
The SBA 7(a) Loan is the most popular SBA loan program mainly because of its flexibility and wide range of acceptable uses. For loans $25,000 and up, collateral will likely be required, and for loans $350,000 and up, the maximum available collateral will likely be required (personal assets can be used to supplement business collateral). While the standard 7(a) loan, which goes all the way up to $5 million, has relatively stringent credit requirements and sometimes takes up to 60 days to fund, the 7(a) small loan, which only goes up to $350,000, can be fast-tracked by the lender with somewhat relaxed requirements as long as the application passes the SBA pre-screen process. If it doesn't pass the pre-screen process, the application will simply have to enter the standard 7(a) underwriting process.
USES
- Refinance debt
- Buy land
- Finance construction expenses
- Purchase equipment, furniture, materials, or supplies
- Expand or acquire an existing business
Express
WHAT YOU NEED TO KNOW
If you need quick cash, an SBA Express Loan might fit the bill. In many ways, they mirror the standard SBA 7(a) loan with regards to acceptable use of funds and funding requirements. The main difference between them is that while SBA Express loans usually have less favorable interest rates than 7(a) loans, their applications usually receive credit decisions within 36 hours and often fund after only 30 days, which is a considerably faster funding speed than 7(a) loans.
USES
- Working capital (5 to 10-year term)
- Line of credit (7-year term)
- Commercial real estate (25-year term)
504
WHAT YOU NEED TO KNOW
The SBA CDC/504 Loan is used to acquire fixed assets or improve existing assets (certain soft costs can be included as well) and has many benefits like 90% financing, no balloon payments, long amortizations (10 to 20 years), and low fixed interest rates (5%-6%). The SBA bank only provides 50% of the funding while an SBA-approved certified development company provides 40%, which means the borrower must have the ability to provide a 10% down payment. This program requires a 20% personal guarantee, a business tangible net worth of $15 million-plus as well as $5 million or less in average net income over the 2 years before the application. Much of the underwriting focuses on the project costs, and since the approval process involves two lenders, the bank and the CDC, instead of just one, funding usually takes longer than the SBA 7(a) and Express programs.
USES
- Purchase long-term equipment
- Refinance debt from facility renovation, equipment refurbishing, and/or business expansion
- Acquire an existing building
- Buy land or finance land developments like landscaping, creating new parking lots, and grading
- New facility construction or existing facility renovation