Small Business Administration (SBA) Backed Financing

SBA backed loans are a highly sought-after financing option for small businesses due to their favorable terms and government backing. These loans, guaranteed by the SBA, provide businesses with access to capital for various purposes, ranging from startup costs to business expansion and real estate acquisition.

SBA 7(a) Loan

The SBA 7(a) loan is the most common type of SBA loan, offering funding for a wide range of business purposes, including working capital, equipment purchases, inventory financing, debt consolidation, and more. These loans have flexible terms and can be used for both startup and existing businesses.

Eligibility Criteria for SBA 7(a) Loan:

  • Business size: Generally, businesses with a net worth of less than $15 million and average net income of less than $5 million over the past two years are eligible.

  • Credit Score: A minimum credit score of 680 is typically required, though exceptions may be made based on other factors.

  • Down Payment: Down payment requirements vary but typically range from 10% to 20% of the loan amount.

  • Collateral: Collateral may be required for loans exceeding $25,000.

  • Use of Funds: Funds can be used for a variety of business purposes, including working capital, equipment purchases, real estate acquisition, and debt refinancing.

Loan Amount: $50,000 to $5 million

Funding Time: The funding process for SBA 7(a) loans typically takes between 30 to 90 days from the initial application to funding

SBA 504 Loan

The SBA 504 loan is specifically designed for commercial real estate purchases or refinancing. This loan program provides long-term, fixed-rate financing for the acquisition, renovation, or construction of owner-occupied commercial real estate.

Eligibility Criteria for SBA 504 Loan:

  • Business Size: Generally, businesses with a tangible net worth of less than $15 million and average net income of less than $5 million over the past two years are eligible.

  • Use of Funds: Funds must be used for fixed assets such as land, buildings, and machinery.

  • Collateral: The purchased property serves as collateral for the loan.

  • Down Payment: A down payment of at least 10% of the total project cost is required.

  • Job Creation or Retention: The project financed by the loan must create or retain jobs in the community.

Loan Amount: Typically up to $5 million

Funding Time: The funding process for SBA 504 loans typically takes between 60 to 120 days from the initial application to funding.

Conclusion: SBA-backed loans offer small businesses a valuable financing solution with favorable terms, low down payments, and flexible repayment options. Whether you're starting a new venture, expanding your business, or investing in commercial real estate, SBA loans provide the capital needed to achieve your goals and propel your business forward.