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)

READ HOW TO APPLY FOR A LOAN

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.