SBA Loan Programs

SBA Microloan Program

The typical Microloan borrower profile is a micro-enterprise that may be a startup. This borrower may have had credit problems in the past and is likely not a candidate for a bank loan.

  • Lender: Non-profit lenders approved by SBA

  • Maximum Loan Amount: $50,000

  • Interest Rate: Fixed average 8%

  • Maximum Loan Term: 6 years

  • Fees: Up to 2% of loan amount

  • Collateral: varies from lender, personal guarantee is likely

  • Typically used for: working capital, supplies, equipment, furniture & fixtures

SBA 7(a) Guaranty Loan Program

The typical 7(a) borrower profile is an existing business, although startups are eligible. For each owner, 20% or more of the business, personal credit must be satisfactory (no recent bankruptcies). Personal credit score must meet lender's minimum requirement.

  • Lender: Banks and Credit Unions

  • Maximum Loan Amount: $5 Million

  • Interest Rate: Generally Prime +2.75%

  • Maximum Loan Term: 10 years (25 years for real estate)

  • Fees: 2% - 3.75% of guaranteed amount

  • Collateral: Personal Guaranty of 75% - 85% of loan amount

  • Typically used for: working capital, inventory, equipment, real estate, debt refinance, acquisition, franchise.

SBA 504 CDC Loan Program (Certified Development Companies)

The typical 504 borrower profile is a seasoned business that can demonstrate repayment ability from historical cash flow. Owners have sufficient personal assets to cover a minimum 10% down payment. These borrowers may be seeking to avoid uncertainty of lease renewals and rent increases, and benefit from commercial real estate ownership. The 504 is usually introduced after a mortgage lender is on board to finance the project property.

  • Lender: Non-profit CDC approved by SBA

  • Maximum Loan Amount: $1,123,588

  • Interest Rate: Fixed, about 5+%

  • Maximum Loan Term: 25 years, fully amortizing

  • Fees: 3% of loan amount

  • Collateral: 2nd lien on Project property

SBA Eligibility

  • Must be a for-profit business

  • Must qualify as a small business concern

  • Must be an eligible type of business

  • Must be at least 51% owned by US citizens or legal permanent residents.

  • Owners cannot be on probation or parole

SBA Ineligible businesses

  • Businesses primarily engaged in lending

  • Life insurance company

  • Real estate investors and landlords

  • Pyramid sale distribution plans

  • More than 1/3 gross revenue from grambling

  • Private clubs that limit membership

  • Speculative businesses

How to Apply for a Loan

The typical loan application will require the following

  • Prior year’s tax returns

  • Historical financial statements

  • 3-year pro-forma financial statement forecast

  • Working capital schedules like Accounts Receivables, Accounts Payable and Inventory.

  • CAPEX schedules

  • Business Plan

  • Personal Assets (for personal guarantees)


Before applying for any type of financing, it is important for businesses to have their books in good order. GFT's accounting services can help get your books ready for a loan application. Continued monthly accounting will help borrowers maintain a healthy relationship with their lenders. GFT corporate finance services can help guide your business with the loan application process.

5 views0 comments