What is an SBA Loan?
SBA 7a loans are financings backed by the US Government’s Small Business Administration and designed to provide qualifying small businesses access to working capital with better terms and lower rates.
Under this program, the maximum loan amount is $5 million, while the maximum term is 25 years. The rates and fees are based on the Prime Rate and are amongst the lowest currently available for small and midsize business loans.
How can you use your SBA Loan
SBA loans can be used for:
- Short and long-term working capital,
- Real estate acquisition, refinancing, or improvement,
- Purchasing and installation of machinery, equipment, furniture, fixtures, and supplies,
- Change of ownership of the business, whether complete or partial,
- Refinancing of current business debt, or
- A combination of the needs above.
SBA financing criteria and repayment
Key eligibility factors for SBA loans are based on the business type, sales, credit history, location, as well as on the credit profile of the principals. Essential qualification criteria include the following:
- The businesses must be operating in the US and demonstrate a reasonable ability to repay the loan. They must conform to both the size requirements and the eligibility set by the government (you may read more about the terms, conditions, and eligibility).
- The applicants must be US citizens and represent at least 51% of the company ownership.
- The borrowers must provide a collateral.
- All 20%+ equity owners must guarantee the loan.
- The FICO scores generally need to be 650 or greater, although scores above 610 are considered on a case-per-case basis.
As part of the application, principals must generally provide personal and business tax returns, personal financial statements, and business projections.
Startup businesses are also considered, based on the cash on hand and liquid assets of the guarantors.
Most SBA 7a term loans are repaid with monthly principal and interest payments from the business’s cash flow. Payments generally stay the same for fixed-rate loans.
Why you should consider SBA loans
While the SBA application process is thorough, BorrowPartner recommends SBA financing to qualified business owners because it provides our clients with the best terms and lowest financing rates in the loan marketplace.
To get started, complete our short-form online SBA application. Alternatively, please don’t hesitate to contact us with any questions. We are always happy to assist.
BorrowPartner provides small businesses with simple, flexible, and affordable access to capital, including SBA loans, business lines of credit, and invoice factoring solutions, all customized around your business needs.
