SBA Loans

You can find an SBA loan option to cover just about every nook and cranny of your small business. Some of the most common SBA loans are the 7(a), 504, and SBA Express. 

The 7(a) is one of the most flexible SBA loans. You can use it to:

• Buy land
• Cover construction costs
• Buy or expand an existing business
• Refinance your existing debt
• Buy machinery, furniture, supplies, or materials

SBA 7(a) loans of less than $25,000 may not require collateral but higher loan amounts likely will. For loans of $350,000 or higher, the SBA requires your lender to ask for the maximum possible amount of collateral to limit risk of default. If you don’t have enough business collateral to cover it, that’s okay – many forms of personal collateral will also help you qualify.

If you’re looking for a large amount of money, you can get a 7(a) loan for up to $5 million if you meet all the qualification requirements.

504 loans can be a bit more complicated than 7(a)s. Because you would use a 504 to fund a project, a thorough examination of your project costs will come into play. When your loan is funded, the lender will initially cover 50% of your costs and the SBA will cover 40% – that means you’re responsible for covering at least 10% right off the bat. You’ll also be required to personally guarantee at least 20% of the loan.

You must use your SBA 504 loan to finance fixed assets, although some soft costs can also be included. Examples of qualifying projects are:

• Buy an existing building
• Build a new facility or renovate an existing facility
• Buy land or make land improvements such as grading, landscaping, and adding parking lots
• Buy long-term machinery
• Refinance debt incurred through the expansion of your business or renovation of your facilities or equipment

There are some cool perks to the SBA 504 loan. For example, you’ll benefit from 90% financing, longer amortizations, no balloon payments, and fixed interest rates.

To qualify for an SBA 504 loan, your business must have a tangible net worth of more than $15 million and an average net income of $5 million or less for the two years prior to your application.

If you need cash in a jiffy, the SBA Express is the loan for you. Unlike the somewhat slower review processes you might encounter with other SBA loans, SBA Express applications are reviewed within 36 hours. This doesn’t mean that you’ll get access to funds that fast though – it often still takes at least 30 days to get your SBA Express loan funded.

You can finance up to $350,000 with an SBA Express. If your loan amount is more than $25,000, your lender may require you to secure your loan with collateral. The loan can be used as working capital (5-10 year term) or a line of credit (7-year term), or as a commercial real estate loan (25-year term).

• Up to $5,000,000 loan amounts
• Loan terms from 10 - 30 years
• Interest rate is prime + prevailing spread
• Funding in 30 - 60 days from approval