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An In-Depth Guide to SBA Loans

SBA Loans

What is an SBA Loan?

An SBA Loan, or Small Business Administration loan, is one of the more popular small business loan types.

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SBA Loans

What is the SBA?

The Small Business Administration (SBA) is a government agency in the United States that is in place to provide support for small business owners throughout the country.

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SBA Loans

Are You Qualified to Get an SBA Loan?

Small businesses that are having a difficult time securing bank loans are turning to SBA loans.

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If you’re a small business owner, you’re probably constantly trying to find additional ways to get funding for your business. Applying for finance can be tough, especially if you’re trying to open a business for the first time. Lenders often prefer to work with business owners that have an established lending history and business credit score. But this isn’t always possible and it leaves potential new business owners with a lack of viable options.

If you’re looking for ways to add to your small business’ working capital or if you need to refinance debts, purchase new equipment or acquire real estate, among many other reasons, an SBA Loan might be the loan product that you’re looking for. This guide will give you all the tools you need to get an SBA loan.

What is an SBA Loan?

An SBA Loan, or Small Business Administration loan, is one of the more popular small business loan types. If you are having a hard time getting approved by your preferred bank for a loan, or if you’re simply not being awarded a good deal, then an SBA loan can be your ideal choice. With loan amounts between $5,000 and $5,000,000 that are payable from 5 to 25 years at interest rates as low as 6.5%, a SBA Loan is a safe choice as it is partially guaranteed by the government. This also means that lenders are more likely to approve you if you have a limited credit history – this is meant to spur investment in small business owners who have yet to start a business.

Loan Amount

$5,000 to $5 million

Term Length

5 to 25 years

Interest Rate

As low as 6.5%

Time to Process

As quick as 3 weeks

This type of small business loan can get approved in as little as 3 weeks’ time. You will be required to make very low down payments and can get a longer payment term compared to other loan types. Furthermore, interest rates remain fair and reasonable and you can use this loan for a wide variety of purposes.

However, it is good to know as early as now that this type of loan may require collateral at certain situations, can involve a lot of paperwork and requirements, and may take quite a bit of time to get approved. This is why it’s important to be aware of all the components of an SBA loan, and to approach the process with plenty of time on your hands.

Comparing Different Loan Types

SBA Loan

Minimum processing time: 3 weeks

Interest rates: Starting at 6.5%

Term Loan

Minimum processing time: 2 days

Interest rates: 7-30%

Equipment Finacing

Minimum processing time: 2 days

Interest rates: 8-30%

Business Line of Credit

Minimum processing time: 1 day

Interest rates: 7-25%

Invoice Financing

Minimum processing time: 1 day

Interest rates: 3% + %/week outstanding

Short-Term Loan

Minimum processing time: 1 day

Interest rates: Starting at 10%

Merchant Cash Advance

Minimum processing time: 1 week

Interest rates: 1.14 – 1.18

Small Business Startup Loan

Minimum processing time: 2 weeks

Interest rates: 7.9 – 19.9%

Personal Loan for Business

Minimum processing time: 1 day

Interest rates: 5.9 – 36% APR

What’s the Small Business Administration (SBA)?

The Small Business Administration (SBA) is a government agency in the United States that is in place to provide support for small business owners throughout the country. The agency was founded in 1953 and has since provided support and guidance to thousands of small business owners across the nation. The agency has an operating budget of over $700m, which it uses to support a variety of initiatives geared towards small businesses and entrepreneurship.

One of the most popular initiatives the government operates is the SBA loan initiative, but they also have a variety of other projects that help enrich the economy. They provide microloans, as well as disaster loan programs for businesses that have been impacted by natural disasters or other major events. In addition, they have special SBA programs geared towards individuals who are underrepresented in the business ownership population – minorities, women, and former military service members all have access to unique programs that are tailor made to help them get the most out of owning a business.

Are You Qualified to Get an SBA Loan?

Because small businesses that are having a difficult time securing bank loans are turning to SBA loans, many business owners are under the impression that the process must be very simple. Truth be told, it won’t be an easy journey for you; however, it doesn’t matter whether you own a small or very new business, as long as you meet the criteria and have complete documentation, you can be granted a SBA loan. This is why SBA loans have become such a popular financial product with business owners around the country.

Typical Customers Who Received Approval

Annual Revenue

At least $180,000

Credit Score

At least $180,000

Time in Business

At least 4 years

Firstly, you must have a strong credit score. This is one of the most important factors considered by lenders. Your personal credit score can be very important as well. For most of our customers, those with a credit score average of about 640 to 680 had better chances of getting approved for a SBA loan.

While nothing is impossible, lenders also usually prefer higher annual revenue and a longer track record for a business. If you have a high credit score and you don’t mind spending a lot of your time and energy applying for this type of loan, there’s no harm in trying if your small business can actually get approved for an SBA loan.

SBA Loan Basics

Plenty of small business owners who haven’t tried loans yet are most often than not curious about SBA loans. Not only will this grant you longer payment periods, it is generally more affordable compared to other small business loan types. If you happened to chat with your other entrepreneur friends about loans, then you must have heard how great it is to be approved for an SBA loan. The question now is: are you eligible for an SBA loan? Is it truly worth your time and energy to find out? Read on and find more information about the basics of SBA loans.

SBA or Small Business Administration

They guide entrepreneurs on how they can spot and take advantage of opportunities and give them access to loans applicable for their small business.

Not the actual lender

Contrary to popular belief that an SBA is a place that can let you borrow money, the SBA only helps you out in securing a bank loan. Basically, you are still getting your money from the bank, except that the SBA, with the help of government funding, will help banks in getting a guarantee for the amount you’re loaning, hence less risk to them. Commercial lenders are effectively SBA loan brokers.

Minus the extra-strict bank criteria

Because of this, banks are less strict when loaning out money through the SBA. This is also the very reason why many business owners who are turned down by banks proceed to the SBA. You won’t be needing an extensive business ownership history like many commercial lenders will require for a traditional business loan – the backing of the government makes it easier for you to qualify as a new business owner.

 

Can be a slow and dragging process

Yes, it can be cheaper and yes, it will be more cost-effective in the long run, but as we already mentioned earlier, an SBA loan can take a whole lot of your time and energy. Remember, the SBA is just helping you out. The bank is still the one processing your request. You must know by now that they love taking their dear time and make things more complex than they should be. In some instances, we’ve seen loans take as much as a few months just to get approved. But with the low rates and the longer payment period? It is definitely worth all the time and energy.

 

A whole lot of documents

If you’re not keen on showing a lot of your business documents, and some personal documents in many cases, then an SBA loan might not be good for you. You will be asked to show a range of documents to prove that you are a worthy borrower. If you don’t have all of your businesses documentation you may find it hard to be approved for a SBA loan. SBA loan lenders are typically quite strict when it comes to requiring proper documentation. The government will not want to back a loan by a commercial lender if they feel you are unable to meet the demands.

 

You’re getting all the help you need

Despite the hard work, you’re still getting all the help you need from the SBA. If you don’t like dealing with banks directly or if you are simply being ignored by financial institutions, the SBA can and will help you out.

 

SBA Loan Documentation

As mentioned previously, there are a lot of documents involved in the entire SBA loan process. The various documents that are needed for the application are some of the most important aspects of an SBA loan that you need to understand before you apply. To save time, you should make sure that you have all the items mentioned in this article with you at the time of your application. The required documents are as follows:

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Comprehensive Business Plan

Z

Debt Schedule

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Balance Sheet

Z

Business Tax Returns (if business is already active)

Z

Personal Tax Returns

Z

P&L Statement

Z

Voided Business Check

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U.S. Driver's License

Z

Bank Statements

Not having these documents with you at the time of application can massively prolong the process of receiving the capital you need – be prepared.

SBA Loan Types

There are quite a few SBA loans you can choose from and if we discuss them one by one right now, it can take a long while. However, if you finally decide on getting an SBA loan for your business, we are more than happy to help you out in choosing the right loan for you. To give you a brief background, here are some SBA loans that you might be interested in:

Microloan

The Microloan program is very popular among small business and new businesses that require loans usually less than $50,000. There are no additional fees associated with this type of loan., however interest rates can go anywhere from 8 to 13%. The maximum payment period though is usually only up to 6 years, and as most loans, there will be monthly charges on top of your loan payments.

These loans are mainly provided by community lenders – organizations set up with the purpose of providing small amount of finance to local business owners. Sometimes community lenders will require you to be of a specific background, or working within a specific industry. For example, there are SBA loans for women and SBA loans for veterans – there are even FEMA SBA loans. That’s why it’s important to research local lenders prior to going in an applying for microloan – you may be wasting your time if you don’t qualify for a specific lender.

 

SBA 7(a) Loan

A popular choice for those seeking loans for general purposes for their small business, you will be charged a guarantee fee based on the maturity of your loan and the guaranteed dollar amount. Another 0.25% will be charged if there’s a guaranteed portion above $1,000,000. To set your expectations, loan payment terms can be as long as 25 years if you’re using the money for real estate, 10 years if you are using it to purchase equipment and for working capital loans, you can get as much as 7 years. Note that the SBA 7(a) Loan can give you one of the longest payment period possible so it is definitely worth considering.

This form of SBA loan can come in either a fixed or variable interest rate. One of the major benefits of using this SBA backed financial product is that there is a ceiling on how much interest charge changes there can be. The SBA have imposed a restriction on how much a lender can increase your variable interest rate. This is great for small business owners who like to be fully aware of their potential costs. Often, lenders can spike an individual’s interest rate which can result in a business owner being unable to meet the debt obligations.

 

CDC/504 SBA Loan

The CDC/504 SBA Loan is usually availed for commercial real estate or equipment purchases. To secure this type of loan, you will be asked to make around a 10% down payment for your purchase. It is actually a very complex loan product but very worth it — the interest rate can only about 5 to 6%. You will only know about the exact rate though about 45 days after the deal has been closed with the CDC.

The CDC is the Certified Development Corporation that usually shoulders about 40% of the loan amount. The remaining 50% comes from a bank. The 10% remaining comes from your down payment. Since there are two separate loans here, it can take time. Payment terms can take as long as 10 or 20 years for this loan type. The long term times have made it extremely popular with companies that are looking to make large, long term investments in real estate of equipment. If you need to invest in a heavy machinery or land, this is probably the best government backed loan available to you.

 

Advantages of SBA Loans

After reading most of this article you are probably aware there are many advantages in getting an SBA loan. But sometimes it’s best to have full outline of the advantages so you can get a more concise understanding of the ways that you benefit from a particular form of finance. The advantages of an SBA loan are provided below:

Interest Rates

Depending on the type of SBA loan you’re applying for, you’ll most likely get very low interest rates. This is because the loans are backed by the government and lenders can afford to take larger risks with you.

 

Eligibility

One of the other primary advantages of an SBA loan is simply how easy it is to be eligible. You will need proper documentation and a deep understanding of the industry you’re working in, but you are much more likely to be approved for an SBA loan than almost any other loan on the market. This is especially true for those who have never owned a business before.

 

Build Credit Score

One of the primary reasons people apply for an SBA loan is because they have a lack of borrowing history. Your personal credit score may act well to help you secure certain forms of finance, but lenders who are offering big payments will often want business experience and lending history. One of the best ways you can get on the borrowing ladder and build a solid lending history is to get an SBA loan and begin making SBA loan payments on time.

 

Disadvantages of SBA Loans

Just as there are many advantages in obtaining SBA loans, there are also plenty of disadvantages depending on your particular situation. Here is a full list of the most prominent disadvantages associated with SBA loans:

Large Amount of Documentation

As mentioned previously, there truly is a large amount of documentation that needs to be filled out in order to be eligible for an SBA loan. This can be problematic for many business owners who may not have all this information on hand, or haven’t though through their entire business model yet. While it is easy to be eligible for an SBA loan, SBA loan requirements for documentation are very extensive.

 

Business Size Cap

Many SBA loans have a cap on the size that your business can be to be eligible. This may seem obvious, as SBA loans are geared towards small businesses. But the truth is that many people who consider their businesses to be small, especially in manufacturing or real estate, may actually be considered too large by the SBA. Make sure to ask you lender what the business size requirements are for your specific loan prior to making any applications.

 

Length of Process

This is similar to the first advantage mentioned, but the length of due diligence effectively ensures that you won’t be able to get your money quickly. The SBA is especially careful that their borrowers fit all requirements, and therefore doesn’t rush to judgement. Many other lenders with higher interest rates may be able to get you money quickly if you’re in needy of quick finance.

 

Tips and Tricks

Firstly, you should begin investing heavily in ensuring that your credit score is as high as possible prior to applying for a SBA loan. Many people don’t think about their personal credit score when they begin applying for various business loans – this is a big mistake. If you have never owned a business before you will not have a business credit score, this means that lenders will use your personal credit score to help judge how suitable of a borrower you are. This poses a range of problems for people who have been irresponsible with lenders in the past. Make sure in the months prior to applying for a business loan that you pay down your debts and try and improve your score as much as possible.

Secondly, make sure that you don’t have any tax problems prior to applying for an SBA loan. Because SBA loans are backed by the government, they’ll want to make sure that you are full up-to-date with your taxation requirements. If you have any outstanding debts with the IRS, or a tax bill that is due soon, make sure that you’re paid up prior to heading to the bank to apply for a loan. You don’t want to get denied for something that could have been avoided. This won’t be a problem for most people, but if you have owed a business in the past, you may have some outstanding tax.

Lastly, make sure to invest heavily in having a comprehensive business plan. Above all else, lenders will want to know that your business is fully viable, and the best way to exhibit this is through a business plan. The SBA want you to have a three-year business plan that exhibits a clear understanding of the industry that you’re working within. You should be able to easily document the ways that you plan to generate revenue, as well as the associated costs that you will have along the way. You should also be prepared to show ways that you will respond to market forces should a problem arise. If you don’t have a business plan, you may want to consult with a professional in order to build comprehensive documentation for your company – accountants can often be a good first port of call for these types of plans. If you don’t want to spend money getting a business plan sorted, you should head to the SBA website for their ‘Build your Business Plan Tool’ – it’s awesome for anyone looking for a nice format for a business plan.

Verdict

After reading this article you should have a much better understanding of the basic principles behind what an SBA loan is. SBA loans may seem like an awesome option for your business, but if you have a great credit score and past business ownership experience, you may find better value in a traditional commercial loan. In addition, you may find that many of these traditional commercial forms of finance are much more flexible than government backed loans.

SBA loans are extremely regulated because they are backed by the U.S. Government. This makes them one of the safest financial products on the market. But this doesn’t mean you should be completely trusting of the entire process. You should ask your lender for a full break down of the costs associated with getting an SBA loan – the best way to do this is to ask for a total cost of the loan. You can also try a business loan calculator. This way you know exactly how much the finance will be costing you and you won’t be surprised by any hidden fees or charges.

You should make sure to put aside ample time to put together your SBA loan application. Rushing into a decision on any form of finance is one of the biggest mistakes that new business owners make when figuring out how to fund their operations. As a business owner, evaluating all the different finance options you have is best way to save your business money in the long run. Plenty of lenders provide SBA loan calculators to help their clients get a better idea of the full costs of this form of finance.

FAQ

SBA loans can be very important for owners who want to make their businesses grow. It has so many advantages in applying for one, but knowing the process can be tricky. The actual procedure is lengthy and it involves a bit of learning to effectively utilize it.

SBA Loan Basics

Learning about SBA loans and the application process can be daunting. So let’s start with the basics and know what SBA loans really are and what can you use them for:

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What is the purpose of the SBA?
The SBA does not directly lend the money to small business owners, instead they act as backers to aid individuals who are trying to start and grow businesses secure loans from financial institutions, mostly banks.
How do SBA loans work?
The SBA works with lenders to provide loans to small businesses. The agency doesn’t lend money directly to small business owners. The SBA reduces risk for lenders and makes it easier for small business owners to access capital.
What are the advantages of a SBA loan?
Among other things, SBA loans offer competitive rates, longer repayment terms, access to high amounts of capital.
What is an SBA loan guarantee?
The SBA guarantees a portion of the loan so banks will give small business owners more flexibility in terms of interest rates and repayment terms.
How much does SBA guarantee?
Depending on the type of loan being availed, the SBA can guarantee from 75% to 85% of the loan. The program’s maximum loan amount is $5 million.
What is the maximum SBA loan amount?
Loans guaranteed by the SBA can range from $500 and up to $5.5 million.
How long does it take to get an SBA loan?
It can take weeks or even months. The can be faster if your personal and business finances are in good shape.
Are SBA loans hard to get?
Since the loans are competitive in terms of rates, and repayment plans are very flexible, lenders and the SBA conducts a very thorough process before approving applicants.
How to get an SBA loan?
The process of applying for an SBA loan will vary by lender, although there will be some commonalities. You’ll begin by completing an application and then will submit quite a bit of paperwork.
How to qualify for SBA loan?

The general SBA loan qualifications are: very good credit score, substantial collateral, a long time in the business, can repay the loan (checked using financial statements), commercial real estate loans must be majority owned, and no debts to the U.S. government like student loans. Also ask about business loans for minorities if you qualify for this.

What are the terms of an SBA loan?
In addition to meeting the SBA size standard, your business must also be: a for-profit business of any legal structure, independently owned and operated, not nationally dominant in its field, and is physically located and operated in the U.S. or its territories.
How does SBA define a small business?
The SBA has a size standard to determine if your business qualifies as small. It varies per industry, and are based on the number of employees or the amount of annual receipts the business has (generally under 500 employees or less than $7.5 million in annual sales).
Do SBA loans require collateral?
Yes. Although the SBA will guarantee up to 85% of the loan, lenders will use the collateral to cover the remaining percentage.
What is the minimum credit score for SBA loan?
It depends on the lender or bank. But generally, a credit score between 700 and 800 will be preferable to lenders. Applying for a SBA loan with a score below 620 may be difficult.
How much down payment is required for an SBA loan?
Typically, it is around 10% of the total loan amount. But it may vary based on the type of SBA loan you have applied to and the bank or lender you have negotiated with.
What is the interest rate for SBA loan?
The current maximum interest rate for 7(a) loans range from 7.5% to 10.0%, while 504 loans have a ceiling of 5.25%. The SBA sets the maximum interest rates that banks can charge on the different types of loans.
Is an SBA loan a good idea?
An SBA loan is a good idea if you have a strong personal credit score. At the same time, you should have a solid business idea or a well-established business.
What is the success rate of SBA loans?

Studies have revealed that 1 out of 6 successful loan applicants for SBA loans fail. Thus, getting an SBA-backed loan to fund your business is no guarantee of success. You may want to look at the current business line of credit interest rate as another option.

What does it mean when the SBA guarantees a loan?
The SBA provides a guarantee to the lender when you apply for a small business loan. If the business owner is unable to pay back the loan, the SBA will be responsible for paying the lender for a certain portion of the loan.
How does the SBA help entrepreneurs?
The SBA helps entrepreneurs to succeed with their business startup or existing businesses. Since the SBA offers guarantee, it makes it possible even for small business owners to get their business started, even when they might lack funding.
Can you have multiple SBA Loans?
You can get up to 2 SBA loans at once. However, you need to have good credit rating in order to qualify for two.
What is SBA 8a certification?
The SBA 8a certification is sponsored by the Small Business Administration (SBA). This type of certification is available for businesses or organizations with over 51% of the business owned or controlled by economically or socially disadvantaged individuals.

Types of SBA Loans

Knowing that you want to apply for a SBA loan is the easiest part of the process. The tricky part is knowing what type of business loan you need and what is the best for your business.

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What is a SBA 7(a) loan?
The SBA offers several types of loans. The 7(a) loan is their flagship program and the most popular.
How to get a SBA 7(a) loan?
To get a SBA 7(a) loan, you need to be: A small business as defined by the SBA, engaged in an eligible industry, operating in the U.S or its territories, able to create or retain jobs and meet public policy goals, and able to provide a sound business purpose.
What is an SBA Express loan?
SBA Express loan, a subset of the 7(a) loan program, is for businesses that are looking for smaller loan amounts, usually under $350,000. No collateral is required for loans up to $25,000.
How do SBA disaster loans work?

When a calamity strikes in an area, low-interest SBA disaster loans become available to those who are affected. These funds will help business owners recover from the calamity. Remember there are also other special programs you may qualify for such as women business loans.

What can SBA disaster loan be used for?
It can be used to repair or replace inventory, business assets, machinery or equipment, real estate and even personal property that were damaged or destroyed during a declared disaster.
How are SBA disaster loans disbursed?
With the Disaster Relief Program, loan funds are given to victims of specific disasters as quickly as possible directly through the SBA.
How hard is it to get a SBA disaster loan?
It is accessible to mostly anyone who lives or owns a business in an area that was impacted by a declared disaster. It is available to homeowners, renters, businesses of all sizes and even private, non-profit organizations.
How long for SBA disaster loan approval?
Generally, it takes two to four weeks before the SBA comes up with the decision, regardless of the loan type or amount.
Can an SBA disaster loan be forgiven?
Yes. But there are certain qualifications for the SBA disaster forgiveness program.
Can you get a SBA disaster loan with bad credit?

Yes. Although the SBA still conducts credit checks, if majority of your accounts are in good standing, you can get a SBA disaster loan. You can also check out small business loans for bad credit from private lenders.

What is SBA 504 loan program?
Also known as the CDC loan, this program is for businesses that plan to purchase owner-occupied commercial real estate or heavy equipment.
What is SBA 8(a)?
It is a program designed to help aspiring entrepreneurs to enter and gain a foothold in government contracting. The program has been an important one for thousands of minority entrepreneurs over the past few years.
What is SBA certification?
It will provide SBA 8(a)program participants access to a variety of business development services, including the opportunity to receive federal contracts on a sole-source or limited competition basis.
How to get SBA certified?
To be approved into the 8(a) program and become certified, your small business must be owned least 51% by socially and economically disadvantaged individuals. You should also be able to demonstrate potential for business success and possess good character.
How hard is it to get SBA 7a loan?
The SBA 7(a) loan is the most popular loan program offered by the SBA. With up to $5 million available to be loaned, it is great for all business sizes. This is also the most difficult loan to qualify for. With attractive terms and the SBA guarantee, you need to meet the following eligibility requirements: 1) business must be officially registered, 2) business must satisfy SBA’s definition of small business, 3) business must be within the US, and 4) the owner must show sufficient investment of time and money into the business.
How to Apply for SBA Veterans Advantage Loan?

To apply and get approved for SBA Veterans Advantage Loan, you must be a veteran, service-disabled veteran, active duty military service personnel, or National Guard members. Spouses of veterans or active duty military service personnel are also qualified. You must submit proper documentation as proof along with other requirements for a traditional SBA loan. Learn more about veteran small business loans.

How do SBA 504 loans work?
SBA 504 loan is a type of loan designed with the intent of purchasing fixed assets, such as a building or real estate. It is one of the different types of SBA loans created to meet the specific capital needs of small businesses.
What is the difference between SBA 504 and 7(a)?
The SBA 504 loan is a form of commercial real estate loan, which deals with the acquisition or purchase of commercial real estate properties or heavy equipment. On the other hand, the flagship 7(a) loan from the SBA is provided to those looking for working capital for their business.
How to get SBA microloan?
If you need less than $50,000 for your business capital, you should consider getting the SBA microloan. You need good credit and a solid business plan to qualify. It is a great option for business startups and established businesses alike.

Application for SBA Loans

Now that you know the type of SBA loan you want to get, have you checked if you’re even eligible? If you are, how do you navigate the lengthy process? Use this information to find out:

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How do I apply for a SBA loan?
While each SBA loan program has its own eligibility criteria and application process (which you’ll work through with your lender), there is some advance preparation that you’ll need to undertake.  From personal and business financial statements to old tax returns, this loan application checklist details what you’ll need to prepare in advance of your loan application.
How to apply for SBA loan online?
Before the actual application, you should research online the type of loan you want to get and if your business is even eligible. After that, most of the process will be face to face negotiation with a lot of paperwork.
How to fill out SBA personal financial statement?
Be prepared to submit five financial documents: balance sheets that list your financial assets and liabilities, statement of cash flow, business debt schedule, and a year’s worth of bank statements.
How to get an SBA loan to buy a business?
The SBA will primary use the following to determine if you can get approved: personal credit score, down payment, collateral, industry experience, and the financial strength of the business you are purchasing.
How to fill out SBA Form 413?
SBA Form 413 or the Personal Financial Statement is required in 7(a) and 504 loan applications. Your potential lender uses this to determine whether you can repay your loan.
How to fill out SBA form 601?
SBA Form 601 is required when construction costs exceed $10,000. Also known as the “Agreement of Compliance”, it certifies that a contractor has complied with anti-discrimination laws.
Who signs SBA form 601?
Both the contractor and the borrower must execute the SBA Form 601. This form should be executed prior to closing the loan.
What are the characteristics of successful SBA loan applicants?
The successful SBA loan applicants are those with good fiscal health or have a reasonable credit history. They also have a strong business plan or gather proper documentation to show proof of business performance and profitability.
How to write a business plan for SBA?
You need to use the same approach when writing a business plan for SBA as with any other purposes. It should clearly and in a detailed manner map out the important steps you will take to build the foundation for your business. The business plan should also map out your revenue projections within the next 3 to 5 years.
How to get an SBA loan for a startup?

The SBA offers loans to help business startups get off the ground. It works the same way as the traditional 7(a) loan from the SBA, although there is a higher risk involved. This will often require 25 to 30% down payment, along with collateral. Don’t forget to also look at grants for small business startup.

Can a non-profit get SBA loan?
No. One of the eligibility requirements for SBA loans is that the business must be a “for-profit” type.
What are OCONUS requirements for SBA loan?
Before you apply for SBA loan while OCONUS, you need to consult a legal team to advise you on the necessary steps to take when running a business when you get OCONUS orders. You must then fill out an application form. Keep in mind that a compliant insurance might be required. You will still have to go through the same process and requirements as any type of SBA loan, except for needing to fill out extra forms to accommodate your special case.
Can you get an SBA loan with no money down?
Most SBA loans will require 10-20% money down. But you can also find loan programs that do not require down payment, which includes SBA Microloans.
How to get SBA loan for a franchise?
Franchises are among the top recipients of SBA loans. The most suitable program for this type of business is the 504 loan. You can expect 50% (or more) in terms of financing for your overall franchise cost.
How do I check the status of my SBA loan?
If you want to check the status of your SBA application, you can call the SBA directly for an update, or visit their website.
How long do I have to appeal SBA loan?
If your SBA loan application was denied, despite satisfying all of the requirements, you must submit your appeal to the SBA within 60 days from the date on your denial letter.

SBA Loans Specifics

Still have inquiries in your mind? Maybe these specific questions will provide the answer you are looking for:

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What banks do SBA loans?
There are over 3,000 financial institutions nationwide that offer SBA loans. You can go to you SBA District Office to check which banks near you offer SBA loans.
What happens if you default on SBA loan?
The lender can close your business and sell its assets, and may even foreclose your home or other properties you used as collateral for the debt. After using all options for recovery, they can make the claim for the SBA’s guarantee. But the collection process will depend on the terms you have agreed to.
Can you refinance an SBA loan with another SBA loan?
It is generally not allowed but may be considered if the borrower has new financing needs, and the existing lender has declined to modify the terms of the existing SBA loan to accommodate the new loan.
Can you get an SBA loan with a bankruptcy?
Yes. But you may need to re-establish your credit first and wait for a couple of years after the bankruptcy before you apply. But there are lenders who are willing to work with clients who have gone bankrupt.
Can SBA loans be discharged in bankruptcy?
Yes, it can. But banks and lenders can still go after the collaterals that you have had pledged.
Can an SBA loan be paid off early?
Yes, you can. But most business loans, especially those with fixed fees, have terms that include a penalty for paying too early in the form of a prepayment fee.
Is SBA loan interest tax deductible?
Yes, the IRS (Internal Revenue Service) sees the interest on your business loan as tax deductible. But in some cases, not the entire interest rate will be deductible. Check your eligibility.
Are SBA loans non-recourse?
No. Most commercial deals, including SBA loans, are recourse. It means the person getting the loan must personally sign as a guarantor on that loan. If the business fails, the owner is still responsible.
Are SBA loans assumable?
Yes, it can, but the SBA will need to approve the assumption and certain requirements must be met.
How to get a SBA grant?
SBA grants are only available to small businesses that are under specific industries like scientific and medical research, and conservation efforts. But securing such grants may take time and effort.
What is SBA Direct?
SBA Direct is a feature on SBA’s website that allows visitors to personalize their browsing experience according to their business type, geography and needs.
What happens if you don't pay an SBA loan?
If you are unable to pay your SBA loan, the lender reports that loss to the SBA. The latter will honor the guarantee given to the lender, which pays up to 85% (for loans amounting to $150,000) of the loan borrowed by small business owners.
Is SBA loan worth it?
If you are a small business owner struggling to get funding for your business startup, taking out an SBA loan is worth it. The requirements might be stringent but if you qualify, it is a great way to get funding within reasonable terms.
How to get SBA loan without collateral?

The SBA typically requires collateral for small business loans. However, in the absence of no collateral (and if it is the sole unfavorable factor against the borrower), they will most likely approve the loan application provided that you satisfy all other eligibility requirements. You can also take a look at the best small business credit card to fund some of your operation.

Do you have to pay back SBA loans?
Yes, you are required to pay back SBA loans. Most loans have terms that extend up to 25 years (for equipment and real estate) and 10 years (for business’ working capital).
Does SBA loan show in credit report?
Whenever there is a personal guarantee on the loan that you applied for, it will most likely appear on your consumer credit report, which is the case with an SBA loan.
When do you start paying back SBA loans?
When you apply for and are approved for an SBA loan, you will be given an amortization schedule. You need to follow this schedule when determining when you can start repaying the loan and for how long.
Can you extend the term on SBA 7a loan?
Yes, you may extend the term on the SBA 7(a) loan but the maximum term would have to be 25 years or less.
How to assume an SBA Loan?
The assumption of SBA loans is allowed but you need to follow the specified procedures. The general requirements for assuming an SBA loan (for all loan types) include the following: 1) letter from the borrower with details of the assumption proposal, 2) signed and completed Financial Statement of the Debtor, 3) borrower’s consent and authorization for third party, 4) copies of Personal Federal Income Tax return (for the past two years), and 5) copy of the buy/sell agreement.

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