SBA Loans: Let the government help you obtain bank financing for your new small business. The Small Business Administration (SBA) was created to assist American small businesses. The most important function of this agency is their loan guarantee program - which helps businesses obtain financing through banks. It is important to note that the SBA is merely a guarantor of loans made by banks and other private parties. Their programs guarantee up to 90% of qualifying small business loans. The 7(a) SBA loan is the SBA’s most widely used small business loan program. The capital from 7(a) SBA loans can be used for most sound business purposes. This includes improvement of assets, refinancing existing debt and working capital. How the SBA loan is paid back, depends on the use of the small business financing.
- The term on equipment SBA loans can range up to fifteen years, but ten is the average.
- Working capital SBA loans are typically amortized over seven years.
- Business acquisition SBA loans can be amortized over a maximum of ten years.
- Real estate SBA loans are extended up to twenty five years unless you are refinancing the property. In that case, the debt is usually amortized over 20 years.
The 7(a) SBA loan guaranty program also has many special purpose SBA loans that allow borrowers to qualify under conditions that would generally make the program unavailable. Some of these loans included, but are not limited to:
- Veterans SBA Loan Program
- Community Express SBA Loan Program
- Disabled Assistance SBA Loan Program
- Energy Conservation SBA Loan Program
The SBA dedicates resources to reach out to special interest groups about their SBA loan programs and other services. Those special interest groups are:
- Native Americans
SBA loan assistance is generally available to most businesses that produce no more than six million in annual revenue, and have no more than five hundred employees. There are some businesses that are ineligible, though. SBA loans are typically not granted to the following businesses:
- Nonprofit corporations
- Lewd goods or services
- Gambling or speculative investing
- Academic schools
SBA loans can be acquired by small start-up or home-based businesses through the Micro-Loan program. The SBA Micro-Loan Program is limited to $35,000, and is amortized over six years. There are also Low Doc SBA Loans available for loan sizes below $100,000, and SBA Express Loans, which permit lenders to offer more flexible forms of small business financing (like revolving credit lines). Finding small business startup capital continues to be a challenge for new companies. The SBA loan guarantee program can be a phenomenal resource for new entrepreneurs who cannot obtain traditional bank financing on their own. If you want more information on SBA loans fill out our form to the right.