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Small Business Administration loan programs explained

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Grow your small business with government-backed financing you can afford.

Small Business Administration (SBA) loans are one of the most competitive financing options out there — in more ways than one. These loans are backed by the SBA and come with some of the lowest interest rates, largest amounts and longest terms you can get.

They’re extremely popular, so getting your hands on government-guaranteed financing isn’t always as easy as it might seem. It also can take as long as several months to get your funds unless you pay for a packaging service.

SmartBiz SBA Loans

SmartBiz SBA Loans

Get funding for your small business with low monthly payments, extended repayment terms and competitive rates.

  • Min. Loan Amount: $30,000
  • Max. Loan Amount: $5,000,000
  • Low starting APR: 6.75%
  • Min. Loan Term: 10 years
  • Max Loan Term: 25 years
  • Must have been in business 2+ yrs w/ annual revenue of $50,000+ and personal credit score of 600+

    What is an SBA loan?

    An SBA loan is a small business loan that’s partly backed by a government guarantee. This means that SBA takes responsibility for paying back a loan if a business can’t. There are several different types of SBA loan programs to choose from, though the most popular are SBA 7(a) loans. You can use an SBA loan for anything from working capital to buying real estate and equipment. Its disaster loans program is also available to both home owners and businesses affected by natural disasters.

    What's an SBA guarantee?

    An SBA guarantee is the government’s legal promise to cover part of the loan if your business defaults on an SBA loan. Typically the SBA guarantees between 75% and 85% of SBA loans, though it depends on the program.

    The aim of the SBA loan program is to make it less of a risk for a lender to work with small businesses that wouldn’t normally be eligible for a traditional bank loan. In fact, you have to prove you can’t get traditional financing to qualify.

    How do SBA loans work?

    SBA loans generally work like any traditional business loan from a bank — but often with a lot more paperwork and complicated qualification requirements. Generally, the SBA doesn’t actually fund the loan, but sets strict guidelines for lenders to follow. These guidelines cover almost every aspect of the loan, including eligibility requirements, loan amounts, terms, interest rates and fees.

    The SBA guarantee can cover up to 85% if the loan in most cases. But business owners are also required to back all or part of the loan with a personal guarantee and provide collateral. So, your personal credit could be damaged and you could lose some of your personal and business assets if you default, despite the guarantee.

    When you apply for an SBA loan, your business goes to a bank or nonbank lender that offers SBA financing. Most can guide you through the application process and fill out all required forms. The whole process can easily take between 60 and 90 days.

    Compare SBA loans from top providers

    In addition to banks, some online business lenders offer SBA loans you may qualify for. Check out some of your options below:

    Rates last updated December 15th, 2018
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    $30,000
    $5,000,000
    650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 1 year old and have monthly revenue of $15,000+.
    National Business Capital Business Loans
    Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.
    $10,000
    $5,000,000
    Your company must have been in business for at least 6 months and have an annual revenue of at least $180,000.

    Compare up to 4 providers

    How to qualify for an SBA loan

    Eligibility requirements can vary depending on the loan program and your lender. However, your business generally must meet the following eligibility requirements to qualify for any program:

    • Your business must be for profit. Nonprofits aren’t eligible for SBA-backed funding, though they can apply for government grants.
    • Your business must be located in in the US. It must have at least one location and primarily operate in the US and its territories.
    • Business owners must invest equity. The SBA wants to see that business owners have invested personal assets into their company.
    • You must have exhausted all other financing options. The SBA requires proof that you’ve tried applying for financing and don’t have the personal assets to cover the expenses you want to fund.
    • Your business must qualify as a small business. The SBA has specific size standards that vary by industry. You can use its online size standards tool to see if it meets this requirement.
    • Your business must be in an eligible industry. The SBA doesn’t work with 19 types of business listed below, though some high-risk industries can still qualify.

    On top of this, some lenders might have additional requirements. For example, many lenders prefer to work with business owners that have good or excellent credit. You also might not be ineligible for a loan just because you have an arrest record. If you’re concerned about your eligibility, consider consulting an SBA lender to get a better idea of your chances.

    Where can I get an SBA loan?

    Generally, you can get an SBA loan from any bank or nonbank lender that offers SBA financing. However, some loan programs only offer financing through specific types of lenders. For example, SBA 504 loans require borrowers to apply through a bank or online lender and an a certified development company (CDC). You can only find SBA community advantage loans through a community-based lender like a local bank or credit union.

    Certified vs. preferred lenders

    You might have noticed that some SBA lenders call themselves certified lenders while others call themselves preferred. Both are good options, though preferred lenders tend to be the fastest

    Lenders that participate in the SBA’s Certified Lender Program (CLP) have some experience and meet certain SBA standards. The SBA expedites applications from CLP lenders by reviewing its credit decision rather than underwriting the loan itself. For a 7(a) loan, this means cutting the underwriting process down to three days from five to 10 business days.

    Lenders that participate in the SBA’s Preferred Lender Program (PLP) have the most experience working with the SBA and meet even more rigorous standards than CPL lenders. PLP lenders have the authority to underwrite and set eligibility standards without having the SBA review the application. For 7(a) loans, the SBA can give approval in as fast as 24 hours.

    Not sure where to start? Try a connection service

    Connection services can help your business find an SBA-preferred lender that your business can qualify for if you don’t know where to go first. It can save you time doing research on your own and also might show you some options that you might not have come across otherwise.

    Some like SmartBiz also provide loan packaging services to cut down on the time it takes to apply for a loan even more.

    What types of SBA loans are available?

    SBA 7(a) loans

    • Max amount: $5 million
    • Max interest: 9.75%
    • Terms: 10 to 25 years
    • Percentage guaranteed: 75% to 85%
    • SBA guarantee fee: 0% to 3.75%

    The SBA 7(a) loan program is by far the most popular: You can use a 7(a) loan for just about anything, including working capital, refinancing debt, buying a new business and real estate. That means they’re easier to find but also can be more competitive.

    The standard 7(a) loan doesn’t have any additional eligibility requirements, though your lender might. You may or may not have to provide collateral, depending on how much you borrow. However, business owners must provide a persona guarantee and a down payment of around 20%.

    SBA Express loans

    • Max amount: $350,000
    • Max interest: 11.5%
    • Terms: 5 to 25 years
    • Percentage guaranteed: 50%
    • SBA guarantee fee: Up to 3%

    SBA Express loans are a quicker, smaller-dollar version of the 7(a) program. You can use the funds for just about any purpose, including working capital and real estate. Express loans come with a quicker turnaround time — the SBA takes up to 36 hours to give a credit decision. It also has a reduced amount of paperwork, making it a better choice for businesses that don’t have months to wait for financing.

    The SBA also offers an Export Express loan of up to $500,000 for small businesses involved in international trade. Rates and terms are the same. However, the SBA guarantees up to 90% of export express loans and can process the application in as fast as 24 hours.

    SBA 504 loans

    • Max amount: $5.5 million
    • Max interest: CDC portion: 3.012% to 3.07% Bank portion: 11%
    • Terms: 10 to 25 years
    • Percentage guaranteed: 40%
    • SBA guarantee fee: None

    Also known as a 504/CDC loan, this program is specifically for businesses looking to expand. You can use a 504 loan to buy real estate, equipment and machinery.

    These loans work a little differently than your typical SBA loan because they actually come from two lenders: A CDC and a third-party lender (often a bank). The CDC portion can range from 30% to 40% of the project and is entirely bacekd by the SBA. The third-party loan isn’t backed by the SBA and must be at least 50% of the project cost.

    It also has additional eligibility requirements and size standards. For example, your business can’t be worth more than $15 million or have made more than an average of $5 million per year over the past few years. This program is also only open to established businesses so startups might want to look elsewhere.

    SBA CAPLine

    • Max amount: $5 million
    • Max interest: 9.75%
    • Term: 5 to 10 years
    • Percentage guaranteed: 75% to 85%
    • SBA guarantee fee: 0% to 3.75%

    The SBA CAPLine program offers both revolving and fixed lines of credit to small businesses. It works a lot like a 7(a) loan when it comes to rates, terms and fees. However, there are four CAPLine programs that restrict how you can use your funds and who qualifies:

    • Seasonal CAPLines. Financing for businesses preparing for a seasonal increase in sales.
    • Contract CAPlines. Financing for business that need funding to fill a contract.
    • Builder’s CAPLines. Financing for businesses taking on a real estate or construction project.
    • Working capital CAPLines. Financing for businesses that are struggling with a short-term slump in sales.

    SBA Community Advantage Loans

    • Amounts: $50,000 to $250,000
    • Maximum interest: 11%
    • Terms: Up to 25 years
    • Percentage guaranteed: 75% to 85%
    • SBA guarantee fee: 0% to 3.75%

    The SBA Community Advantage program is a pilot set to either expire or get extended in 2020. Its aim is to promote economic growth in underserved areas and markets. Community Advantage lenders tend to overlook factors like poor credit or low revenue as long as your business could potentially provide jobs or stimulate economic activity in an underserved area.

    Like 7(a) loans, there are few restrictions on how your businesses uses the funds. But these loans are only available through mission-driven lenders like CDCs and Community Development Financial Institutions (CDFI). To find a lender near you, reach out to your local SBA office.

    SBA disaster loans

    • Amounts: $2 million
    • Maximum interest: 4%
    • Terms: Up to 30 years

    The SBA disaster loan program is unique in a few ways: It’s the only loan program that the SBA directly funds and it’s available to both business and home owners. It’s designed to help people recovering from a natural disaster like a hurricane or a flood, and also provides funding for businesses owned by military reservists on active duty.

    You can apply for a disaster loan through the SBA website.

    How to get an SBA disaster loan

    More SBA loan programs to consider

    ProgramWhat it isMaximum amountMaximum rateTermsSBA guarantee
    SBA 7(a) Small LoansSimilar to the 7(a) program but with a lower maximum amount.$350,0009.75%Up to 25 years75% to 85%
    SBA Veterans AdvantageGeneral-use business loans with no guarantee fee for majority veteran-owned small businesses.$350,00011.5%Up to 25 years50%
    SBA International TradeGeneral-use financing for businesses actively involved in international trade or hurt by competition from imports.$5 million9.75%Up to 25 years90%
    SBA Export Working Capital ProgramShort-term working capital for exporters backed by invoices or other business assets.$5 millionNo SBA rate capOne to three years90%
    Non 7(a) MicroloansShort-term financing directly from the SBA through nonprofit intermediaries for most uses, except refinancing debt.$50,0007.75% to 8% above lender’s cost to fundUp to six yearsNone

    Is an SBA loan right for my business?

    Consider an SBA loan if …

    • You have time. SBA loans can take at least a month to process and require a lot of forms and paperwork that you won’t have to fill out with other types of loans.
    • You tried and failed to get financing elsewhere. In fact, the SBA requires small businesses to prove that they don’t have other options with reasonable rates and terms.
    • You care about cost. These loans come with some of the lowest rates around. Plus the long terms can make your monthly repayments extra-affordable.
    • You have good credit. While the SBA doesn’t specifically have credit rating requirements, many lenders ask that all business owners with a 20% stake in the company or more have at least good credit.

    Look elsewhere if …

    • You need emergency funding. Even the fastest SBA loans can take up to a few weeks. Consider other online lenders if you need money as soon as possible.
    • Your business can fund the project itself. You won’t be able to qualify for an SBA loan if you can show that your business has the means to pay for the project out of its own funds.
    • You have bad credit. You might be able to qualify for a community advantage or disaster loan with low credit rating, but other programs are likely off the table.
    • You’re facing criminal charges. If you or any other business owner is currently facing criminal charges, you’re more than likely ineligible for an SBA loan.

    Bottom line

    SBA loans have some of the best rates and terms around, especially if your business has struggled to qualify for financing in the past. But their complicated application can make them better suited for large projects and less-than-ideal as a source of emergency funding.

    To learn how SBA loans stack up to other types of financing, visit our business loans guide.

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