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Small Business Administration Loans

Small Business Administration loans were created by the US government as a way to help grow America’s economy by providing capital to entrepreneurs that wouldn’t normally qualify for bank financing. The intent is that small business owners will prosper with these funds and help make our economy more competitive and to create jobs.

It's important to understand that the Small Business Administration doesn’t lend money, they act as an insurance company and “backs” lenders that fund these loans. Banks with the full guarantee of the United States Government and specially per the rules of the SBA makes loans and in the case of borrower default, lenders get most of their capital back by the SBA.

Small Business Administration Loans – Types of Programs

There are many types of SBA loans but the most common is the SBA 7a loan and the SBA 504 loan. The SBA 504 loan is used by more established companies, with 3 plus years in existence, and for the purchase or refinance of commercial real estate. Loan amounts go up to $13,000,000. Some of the main benefits of the program include 90% financing with low, long term fixed rates.

The SBA 7a loan has many more uses and is much more common. This is the classic Small Business Administration loan program that most people think of, when they think of the SBA. You can finance virtually anything with it as long as it relates to small businesses, including: funding start ups, business acquisitions, working capital, business goodwill, equipment, commercial real estate, construction, debt consolidation, etc. And you can finance all the above into the same loan. Loan amounts can go up to $5,000,000.

Also, the SBA 7a loan program carries a larger guarantee percentage for the funding bank and is more profitable for them than the 504 loan. So this, with all of the uses mentioned above makes this the more commonly used program.

There are other Small Business Administration loan programs as well such as micro loans. These loans are smaller as they normally only go up to $350,000 and as low as $5,000. They are mostly used for working capital.

We do Small Business Administration loans nationally, with a minimum loan amount of $400,000. We also require commercial real estate as collateral and do not currently finance start ups. We invite you to take a few minutes to fill out our pre approval form to take the first step.

SBA Loan Information - Loan Programs:

Educational - SBA Loan Information