Small Business Loan

What is a Small Business Loan?

A small business loan comes from the Small Business Administration (SBA) and is a good option for business owners who need help through a tough period or want to grow their business but can’t find non-government funding. They are partially guaranteed by the government and issued by participating lenders.

 
Types of SBA Loan
  • SBA 7(A) Loans: Small business loan issued by private lender and partially insured by the SBA. There are multiple types of 7(A) loans, including:

    • SBA Express Loans: For amounts up to $500,000.00. Faster than a standard 7(A) loan but is less guaranteed.

  • SBA 504 Loans: Loans for financing large equipment or real estate-related purchases.

  • SBA Microloans: Loans specifically for startups. Fully funded by SBA and typically used for purchasing inventory, supplies, furniture, machinery, equipment, and other things necessary for starting  a business.

  • SBA Disaster Loans: Loans for helping small businesses affected by natural or economic disasters, such as the COVID-19 pandemic.

  • SBA Community Advantage Loans: Loans for general business uses.

  • SBA Export Working Capital Loans: Loans to support export sales.

  • SBA Export Express Loans: Loans to enhance export development.

  • SBA International Trade Loans: Loans for long-term funding to expand export sales or modernizing to contend with foreign competitors.

 

Requirements

In order to qualify for an SBA loan, businesses have to be small in size, usually operating for at least two years, have a strong annual revenue, and a good credit score of at least 690. The business in question also has to be for-profit, therefore charitable or religious institutes do not qualify.

 

SBA loans also require owners that own more than 20% of the company taking the loan to make an unconditional personal guarantee. This means the owners’ personal assets are on the line if loans are not paid on time. These owners also cannot be incarcerated, on parole, or a defendant in a criminal proceeding. There are also loan limits and varying requirements depending on the type of SBA loan being made.

 

In order to make sure you qualify for the type of SBA loan you want, make sure to ask your lender.