- Borrow $5,000 to $5,000,000
- APR as low as 5.75%
- Funding in as little as 3 weeks
- Longest term lengths
- Lowest down payments
What is an SBA Loan?
While securing an SBA loan is a lengthy process that requires quite a bit of paperwork and time, it’s one of the best ways to fund a business or refinance existing debt. The capital you get from an SBA loan can be used for all business purposes including buying equipment or inventory, refinance existing debt, or opening a new location.
Benefits of SBA Loans
The application process for merchant financing is quick and easy — far from the complicated and long process of traditional small business loans. Once your financing is approved, you can typically receive the money in your bank account within one to two business days. Check out the requirements below to determine if you can get approved for an MCA.
Low down payments
Since the financing is partially backed by the Small Business Administration, lenders have the lowest down payment requirements. The average down payment for SBA 7(a) loans is 10% of the total amount.
Federally guaranteed up to $5M
The Small Business Administration provides a guarantee to the lender for up to 85% of the total loan amount. This mitigates the risk for lenders to lend you the working capital needed.
Long term lengths
The 5 to 25-year term length offered by SBA loans are usually the longest as compared to traditional financing options. The longer term allows a business owner to pay it back at a slower pace.
Low interest rates
Starting at 5.75%, SBA loans offer good APR rates through it’s approved banks and lending partners. We help you navigate the approval process to secure the best loan possible.
Capital can be used for any business purpose
What are SBA 7(a) loans?
The SBA 7(a) loan is the most popular financing option offered by the agency. The 7(a) was created to level the playing field for small businesses to secure working capital from commercial lenders.
A startup business that wouldn’t have the cash flow history to secure a traditional loan, can be eligible to secure an SBA loan since it’s partially guaranteed by the federal government (up to 85%).
- Average interest rates: 5% to 10%
- Loan amounts: Up to $5,000,000
- Term length: 10 years for working capital loans, 25 years for real estate loans
- Minimum credit score needed: 640+
- Down payment: 10% to 20% of the total loan amount
- Backed by the Small Business Administration up to 85%
- Long term lengths
- Capital can be used for any type of business expense
- Competitive interest rates
- High paperwork and documentation requirements to apply
- Time to get funded is long compared to traditional loans
- Requires a down payment
- Some collateral is needed to secure a loan
What are SBA Microloans?
The SBA Microloan program is designed to provide funding to non-profit lenders that in turn provide financing to for-profit businesses. As compared to 7(a) loans, SBA Microloans have a maximum financing amount of $50,000 and are not guaranteed by the federal agency.
- Average interest rates: 8% to 13%
- Loan amounts: Up to $50,000
- Term length: Up to 6 years
- Minimum credit score needed: 575+
- Down payment: not required
- Great financing option for underserved business owners like women, veterans, and minorities
- Business owners with limited credit history can qualify
- Low interest rates
- Longer term length as compared to traditional loans
- Limited to $50,000 in working capital
- Lengthy process that can take 30 days or more
- Must provide a business plan with estimated financial projections
- Some collateral is needed
SBA loan use of funds
- Equipment needs
- Inventory and supplies
- Pandemic & coronavirus relief
- Refinancing debt
- Payroll & taxes
- Rent & utilities
- Business expansion
- Purchasing real estate
- Repairs & upgrades
- Strong personal credit, financials, industry, and time in business required
(Note: These are general SBA loan qualifications. Other information might be considered during your application.)
SBA loans at a glance
- Rates starting at 5.75%
- 30 – 90 day closing
- $5K – $5M available in funding
- 0-year working capital loan
- 25-year real estate backed loan
Frequently Asked Questions about SBA Loans
On average, it takes around 3 to 6 months to receive funds, though the duration of the process varies depending on a number of factors. Things generally move slowly because the SBA has to work with banks and outside lenders to complete the transaction.
Capital can be used for a wide range of business-related expenses. Common uses include the following: start-ups, emergencies, real-estate, mortgages, and buying equipment.
For COVID EIDL loans, small businesses, U.S. agriculture businesses with less than 500 employees, and non-profit organizations can be eligible. For declared disasters, the list of businesses eligible for funding becomes even more expansive.
The application process tends to be drawn out and paperwork heavy. Lenders will want to carefully review all documentation to make sure all eligibility criteria is met.