COVID-19 Resources: Visit our COVID-19 Resources page for helpful links, updates, and resources for your business. Learn more.
What is an SBA loan?

SBA loans are small-business loans guaranteed by the SBA and issued by participating lenders, mostly banks. The SBA can guarantee up to 85% of loans of $150,000 or less and 75% of loans of more than $150,000. The average 7(a) loan amount was about $425,500 in 2018, according to the agency’s lending statistics. The program’s maximum loan amount is $5 million. If you’re looking to open a new location, hire employees or refinance an existing loan, SBA loans are a great option. SBA loan rates and terms typically are more manageable for borrowers than other types of financing.

What interest rate and terms can I get on an SBA loan?

In keeping with SBA rules, participating lenders set their interest rates based on the prime rate plus a markup rate. The loan term depends on how you plan to use the money, according to the SBA:

  • Working capital or daily operations: seven years.
  • New equipment purchases: 10 years.
  • Real estate purchases: up to 25 years.
  • For SBA loans, a longer term means a lower interest rate and lower regular payments. That means you’ll have more money available for other business needs.

    What is an SBA loan guarantee?

    Lenders provide the funds that make up an SBA loan, but the agency guarantees a portion of the amount, up to a $3.75 million guarantee. That means if you default on the loan, the SBA pays out the guaranteed amount. This guarantee lets lenders offer longer terms for repayment than they otherwise could, which means your monthly payments will be lower. The SBA also requires a personal guarantee from every owner with at least a 20% ownership stake and from others who hold top management positions. A personal guarantee puts you and your personal assets on the hook for payments if your business can’t make them.

    How do I get an SBA loan?

    Applying for an SBA loan can take weeks, even months. Your chances of being approved are greater if your personal and business finances are in good shape. If your business is struggling, an SBA loan is probably out of the question. And if it falls into any of the ineligible categories the SBA spells out on its site, don’t bother applying. If you think you qualify, the best place to start is the SBA website, which includes a loan application checklist. Use this to gather your documents, including your tax returns and business records. Here are some of the documents you’ll need before applying:

  • SBA’s borrower information form
  • Statement of personal history
  • Personal financial statement
  • Personal income tax returns (previous three years)
  • Business tax returns (previous three years)
  • Business certificate or license
  • Business lease
  • Loan application history

  • LET US HELP YOU GET THE FUNDS
    YOUR BUSINESS NEEDS

    GET A FREE QUOTE 800-219-4311