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How to apply for an SBA loan for small businesses

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The SBA program allows lenders to make loans for those businesses that may not otherwise qualify for a cash advance loan, equipment loan, startup loans, or other conventional bank loans. The federal Small Business Administration (SBA) partially guarantees loans to reduce lenders' financial risk. `

The federal Small Business Administration (SBA) does not directly provide the loan. Rather, a lender provides the actual loan to the borrower and the federal SBA guarantees a portion of the loan.

List of top SBA loan programs for small business in 2020

As it turns out, many businesses including small or newer ones can qualify for an SBA loan. The most important factor will be your credit score. SBA loans are for business owners with strong borrowing histories. SBA loans usually require a lot of time, energy, attention, and documentation.

The type of SBA loan you need depends on what you're using the funds for and how much you want to borrow.

    • 504 Loan

    • Borrowers can qualify for up to $5.5 million, depending on their industry. Borrowers can use these loans to buy real estate and equipment.
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    • 7(a) Loan

    • SBA 7(a) loans are for a maximum of $2 million, with the federal SBA loan guarantee of no more than $1.5 million (75%). The terms of SBA 7(a) loans are 25 years for real estate and equipment and seven years for working capital. The cost of a loan is based on the prime rate, the size of the loan, and the maturity of the loan.
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    • Community Advantage

    • For new and existing businesses that need between $20,000 and $250,000 in business capital. The loan can be used to start or expand your business. The SBA guarantees a portion of each loan.

    • This loan program, a pilot within the 7(a) loan program, serves small businesses in underserved markets.
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    • Microloan

    • Microloans are available through certain nonprofit, community-based organizations that are experienced in lending and business management assistance. If you apply for SBA microloan financing, you may be required to fulfill training or planning requirements before your loan application is considered.

    • This business training is designed to help you launch or expand your business. Loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000.
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    • Disaster loan

    • Borrowers can access low-interest loans of up to $2 million directly from the Federal SBA through a private lender to fix or repair real estate or other assets damaged or destroyed in a declared disaster. There is also a particular disaster loan program for businesses affected when an essential employee who is a reservist is called to active duty.
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How to start with an SBA loan program for small business

Eligibility is based on what a business does to receive its income, the nature of its ownership, and where the business operates. Usually, businesses must meet size standards, be able to repay, and have a sound business purpose.

Even those with bad credit may qualify for startup funding. The lender will provide you with a full list of eligibility requirements for your loan.

List of documents required for an SBA loan program application

  • Driver's License
  • Voided Business Check
  • Bank Statements
  • Balance Sheet
  • Profit & Loss Statements
  • Business Tax Returns
  • Personal Tax Returns
  • Business Plan
  • Business Debt Schedule

How to calculate the cost of an SBA loan

Interest rates for SBA loans are the daily "Prime Rate", which varies based on moves taken by the Federal Reserve, plus a private lender's fee. The private lender's fee is settled between the borrower and the lender and can result in either fixed or variable interest rates.

However, the SBA caps the maximum fee lenders can charge based on the size and maturity of the loan.

SBA loan program with Merchant Cash Advance 360

Merchant Cash Advance 360 is a nationally-recognized, award-winning SBA Preferred Lender. We make decisions locally, making the process quicker and easier. We’ll also get to know your goals and offer a loan solution that best fits your needs.

The time it takes to get an SBA loan depends on several variables, including how quickly you can submit the necessary paperwork and information. The process is much quicker and more streamlined at Merchant Cash Advance 360 because of our SBA Preferred Lender status, which gives us the authority to complete the entire loan process from start to finish.

Our team of small business experts is ready to assist you with your loan needs.

Loan Application

To qualify, you should be in business for at least six months & have a minimum of $50,000 in annual revenue.

$50,000
3 Years
$30,000
1 Year

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