What is an SBA Loan?
  • Alan Hayon

What is an SBA Loan?

SBA loans are business loans guaranteed by the Small Business Administration. The Small Business Administration has multiple SBA funding programs and provides up to 85% of the loan amount that is guaranteed through an SBA approved lender such as a bank. The 3 main SBA loan programs allow you to borrow money for most business purposes through these SBA guaranteed loans such as buying equipment or inventory, purchasing real estate, refinancing debts or working capital.

Who Qualifies for an SBA Loan?

Both new and small businesses can qualify for an SBA loan. Your credit score will determine if you qualify or not. SBA loans are for business owners who have a solid borrowing history.

SBA loans can require a lot of documentation along with time, energy and attention. There is no such thing as getting an SBA loan today. If a lender promises you a fast SBA loan, run. Even though it can take time to secure the loan, SBA loans are perfect for business growth and debt refinancing at the lowest rates.

How Do You Apply for SBA Loans?

Many banks offer SBA loans, have extensive loan applications and will be analyzing the financial details of your company. The minimum amount of time it will take for a loan to be approved is a few weeks.

For a quick and simple process, contact The Credit Desk.

How Do SBA Loans Work?

Business owners often ask what an SBA loan is or how to apply for a loan. SBA loans are one of the greatest ways to grow a business affordably and at a low-cost.

How do you get approved?

The Credit Desk has helped thousands of businesses get approved for an SBA loan. We know exactly what the eligibility requirements are and how the product works. With that much experience, we are sure we can help you apply for an SBA loan.

The Fundamentals

SBA stands for Small Business Administration. The SBA helps small businesses get started, manage, and grow their business. Many people think that the SBA just loans money to businesses. This is false. The SBA uses federal money to guarantee a percentage of loans that are lent out by banks so that banks will want to lend out more money to small businesses.

This makes it less risk for lenders which means that more businesses will be able to secure low rate, long term financing solutions from banks. Since there is a guarantee for bankers they are more willing to lend out money without a strict credit criteria. They are able to serve more people this way.

Applying for an SBA Loan

Even though it is easier to qualify for a SBA loan than a traditional bank loan the process still takes time. Getting approved for an SBA loan can be a complicated, length process through any bank. Lenders will go through your financial history including reviewing your financial and credit statements They may even want you to have collateral in order to secure a loan. They may even ask for your business plans. The longer repayment terms and low interest rates make an SBA loan worth the wait.

What is the application like?

The loan application is extensive and you will need to provide many documents. Some of these documents include: a description of your business, financial statements, explanation on what the loan will be used for, information on your collateral and more. The bank is going to want to loan to an applicant with a solid business plan, history of demonstrating that they will repay the loan, great credit and a profitable business. You credit history is an important factor on whether or not you will be approved for an SBA loan through the bank.

Check out one of The Credit Desk's SBA Loan approval success stories below.

How to Choose the Right SBA Loan Program

Here a 3 popular SBA loan programs:

  • The Microloan Program

  • The CDC/504 Loan Program

  • The 7(a) Loan Program

How do you know which one to choose?

The program you choose will depend on a variety factors such as goals of your business, the size and age of your business. The SBA 7(a) Loan Program is the program most businesses choose due to the loan’s ability to refinance old debt, renovate a location and expand working capital.

What is an SBA 7(a) loan?

  • For general business needs

  • Repayment terms of up to 10 or 25 years

  • A loan amount of up to $5 Million

What is The CDC/504 Loan Program (second popular)?

  • Mostly used for commercial real estate or large equipment

  • A loan amount up to $5.5 Million

  • Repayment terms of 10 or 20 years

What is The Microloan Program (third popular)?

  • A loan amount up to $50 Thousand

  • Repayment terms of up to 6 years

  • For starting a new business or expanding a small business

If you do not know where to start with an SBA loan program, The Credit Desk can help you decide which program is best for your business and work with you to get qualified.

Contact The Credit Desk