What is an SBA Loan and How Do I Qualify?

Small Business Administration Loans

What is an SBA Loan and How Do I Qualify?

SBA LOANS

The loan programs are operated through private lenders that provide loans which are, in turn, guaranteed by the SBA. Financial institutions offer SBA Loans to businesses that will successfully apply it towards ensuring the long-term success of the business. For this reason, qualifications for an SBA Loan differ from those of other types of loans; there is less of a burden on the borrower to demonstrate collateral and cash assets.

When the SBA helps your business acquire a loan, it is understood that you will pay back the loan on a lengthy schedule of smaller payments. Many SBA loans are expected to go towards acquiring materials, equipment, or property necessary to carry out the expansion of an existing, successful business. Most of these applicants have a business that despite bringing in steady income lacks in the capital. The application process varies depending on the type of SBA Loan being sought, and there are several types of loan programs. The rates and limits also vary based on the loan program.

SBA COMMERCIAL LOAN

To expand your commercial business without overextending your finances, it may pay to consider an SBA Commercial Loan. A great feature of these loans is that unlike many other types of loans, Commercial Loans backed by the SBA may be granted even in cases where a borrower can only supply limited collateral. The benefits of securing an SBA Commercial Loan to expand your business are obvious: the reduced risk to your lender allows for larger loans, paid back over a longer period.

SBA BUSINESS LOAN

These loans are meant for those interested in the loan to broaden the scope of their business or expand into new markets. They are mostly used to cover the added overhead costs that come with expanding businesses. There are lots of ways to finance your business, but if you feel like you've run out of options, it could be time to see if you qualify for an SBA Business Loan. Unlike other business loans out there, weak collateral usually isn't enough to disqualify you for an SBA business, if you meet the SBA's other requirements.

SBA LOAN FOR WOMEN

SBA can offer you some nice benefits with your loan if you are a business owner and a woman. Here are some of the important benefits: -Pre-qualification: To encourage women business owners to apply for loans, the SBA has created a pre-qualification program that streamlines the SBA loan process for women business owners. -Guidance and support: From training to research to networking, the SBA has attempted to establish a variety of programs that together form a clearinghouse and support center for women business owners and entrepreneurs. -Special loans: Women are included in groups that qualify for the SBA's 504 programs. The SBA 504 loan for women business owners offers generous loans for the expansion of women-owned businesses within a community.

SBA a 504 LOAN PROGRAM

An SBA 504 loan is a loan in which a private lender recommends a loan candidate for government money through the SBA. Generally, the private lender will recommend candidates who fulfill the application requirements and who are looking to purchase fixed assets. These assets may include purchasing land and making improvements, buying long-term equipment and machinery, making street improvements and building parking lots, and renovating or converting existing facilities. This program provides long-term, fixed-rate financing to small businesses to acquire real estate or machinery or equipment for expansion or modernization.

7(a)LOAN GUARANTY PROGRAM

One of the SBA's primary loan programs, 7(a) offers loans of up to $2 million. (The maximum dollar amount the SBA can guarantee is generally $1 million.) This is the SBA's primary loan program, and it is also the most flexible. It is designed to help small businesses obtain funds when normal lending channels may be closed to them. The loan comes through normal commercial lending channels and has a maturity of between 10 and 25 years and can be used for several purposes such as the renovation of existing structures, construction and expansion, furnishings and fixtures, land and buildings, and debt refinancing.

MICROLOAN PROGRAM

This new program offers loans of up to $35,000 to qualified start-up, newly established, or growing small business concerns. Loans are arranged through nonprofit community-based lenders (intermediaries) which, in turn, make loans to eligible borrowers. The entire Microloan process is handled on the local level, but you must go to one of the local intermediaries to apply. This is offered to small businesses and usually amounts to below $35,000. These loans are granted for supplies, equipment, furniture, fixings, machinery...

TARGETED LOAN PROGRAMS

Besides the general programs described above, the SBA offers several loans designed to meet specific needs.

SBA VETERANS LOANS

Unfortunately, the SBA has not been granted funds to offer special loan programs to assist either veterans or disabled persons. However, individuals of both groups are eligible for all SBA loan guaranty programs. Also, veterans are eligible for special consideration under SBA's guaranty loan programs.

SBA EXPRESS LOAN

In many cases obtaining an SBA-backed loan is a lengthy process. The good news is that the SBA offers an express loan for its most common loan type - the 7(a)loan. While it is not always possible for a small business to receive SBA Express Loan backing, it is a very attractive service. Qualifying businesses and lenders may enjoy a turn-around-time of no more than 36 hours, making this a very quick loan processing service that can provide borrowers with up to $350,000 in a very short amount of time.

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