SBA Loans Financing Small Business
Helps People and America Grow

Discover how SBA business loan financing programs for small businesses can help acquire bank funding. Guarantee programs include including 7(a), 504 and disaster assistance. Whether you're starting a business or expanding one, sufficient SBA loan financing and ready capital is an essential element. While poor management is noted most often as the reason small businesses fail, inadequate or ill-timed funding is a close second.

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Though the SBA isn't financing loans directly to help you start or expand a business, they work with banks and lenders to guarantee a percentage of the loan so that the lender has less risk. This makes funding attractive to lenders and borrowers alike.

It is not enough to simply have sufficient capital. Industry experience, knowledge and planning are necessary to manage the small business successfully. These qualities ensure that entrepreneurs avoid common mistakes like securing the wrong type of funding, miscalculating the amount required, or underestimating the cost of borrowing capital.

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid in financing business loans, counsel, assist and protect the interests of small business concerns, to preserve free enterprise and to build, maintain and strengthen the overall economic strength of our nation. We know that small business is critical to our nation's economic development and strength, and to helping the United States compete in today's global economy. Although SBA has grown and evolved in the years since it was established in 1953, the bottom line mission remains the same. The organization helps Americans start, build and expand small businesses. Through an extensive network of field offices and partnerships with public and private organizations, it delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.

SBA 7(a) Loan Program

To refinance existing businesses

To buy new commercial site(s)

For expansion or remodeling

Amounts $250,000 - $5,000,000

Usually 25 years

LTV usually 70 - 90%

The primary purpose of the Small Business Administrations program is to help small business. In the 7A Program, the government guarantees up to 75% of the bank loan. To be eligible for financing an SBA loan, the business must be owner-occupied (50% or more), you must be a US citizen or have permanent resident alien status. In addition, your financial statements must be in order and have a reasonable business plan, proforma and projections. Experience in your industry is also very important. This funding generally does not take longer to finance than conventional commercial programs. Seller carry backs are also acceptable if the borrower has at least 10% of their own funds into the transaction.

504 Program

To refinance existing businesses

To buy new commercial site(s)

For expansion or remodeling

For leasehold improvements

For equipment

Amounts $250,000 - $5,000,000

Usually 20 years (real estate) and 10 years (equipment)

LTV usually 70 - 80%

The primary purpose of the Small Business Administrations (SBA) loan program is to help financing small business. In the 504 program, the bank provides 50% of the funds as a first mortgage, and a development company provides 40% of the funds as a second mortgage. This program offers a 20-25 year amortization, and the rate is fixed for 2 years. Lender requirements include: Management experience is critical. Historic cash flow and repayment ability including secondary sources is also factored in. They will also look at cash infusion or down payment, the balance sheet must show a positive net worth, and collateral. To be eligible, you must be active in management with at least a 50% owner occupied rate, and must have less than 500 employees. The minimum down payment is usually 10-20%. Preliminary approvals usually take 2-3 days, and firm approvals 1-3 weeks. And it usually takes 5-7 weeks after required submissions to close. Seller carry backs are acceptable.