The SBA, short for Small Business Administration, is a federal agency that exists to help entrepreneurs create and develop small businesses. As part of its services, it has an SBA loan program, whereby the agency guarantees a portion of the loan so that lenders feel more comfortable taking the risk. The loan programs offered by the SBA include SBA Express Loans, SBA 7(a) loans, SBA CDC/504 loans, and Community Advantage Loans, as well as microloans for those who need a lower amount of financing.
SBA Express Loans
For businesses that have been in business for more than 1.5 years, these loans provide working capital of up to $350,000. You can use them for buying equipment as well. If you’re looking for less than $100,000, you do not need to prove your income.
SBA 7(a) Loans
Ideal for businesses just getting started or for those who are ready to expand, an SBA loan of this type comes with a lower down payment and is financed over a longer period of time. The longer finance period lets you put your money into operations instead of debt. For these, you are going to need to show your business as well as personal tax records.
These loans are used for the financing of equipment, real estate, or other assets. In the case of real estate, the borrower must have the majority occupation of the space, if not 100%. The rate is fixed and designed for companies with less than 500 employees and sales lower than $6 million.
Community Advantage Loans
These loans are specifically for borrowers who often have more difficulty acquiring loans. Businesses must be viable and the borrower has good credit, but there is not the same requirement of collateral or balance sheet size as with typical loans.
This program allows access to smaller loans, less than $50,000, which can be used for businesses just starting out or that are ready for expansion. This SBA loan is available for a multitude of uses, including inventory, furniture, supplies, equipment, or working capital. They may not be used to pay off debts or for the property.
The Small Business Administration exists to help small businesses with a variety of services, such as backing loans for their development. They also offer training and guidance for those entrepreneurs who need a helping hand so it’s worth stopping by your local office to find out more about what they have available.