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What is SBA Loan

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A Small Business Administration or an SBA loan is a small business loan that is partially guaranteed by the federal government (the Small Business Administration), which reduces some of the risks for the lenders.

Lenders appreciate SBA loan programs because the SBA shares some of the risks by guaranteeing a part of the loan amount. Because of that guarantee, lenders can offer more flexible payment terms and lower interest rates so most small businesses can qualify easily.

If you can qualify for an SBA funds, then you should almost certainly consider it your very best option for business financing.

In this business blog, we will discuss in detail the different types of SBA Loans, their requirements, benefits, drawbacks, application information, and other things you may need to think about when considering an SBA loan.

How does Small Business Administration loan work

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

The SBA, in partnership with lenders, created guidelines to aid small business expansion and growth. Unlike traditional bank loans, SBA loans are specifically to help small and medium-sized business owners.

With some of the highest loan amounts, the longest-repayment terms, and the lowest interest rates available to small businesses, SBA loans are the unchallenged winner of small business loans.

What is the minimum qualification for SBA Loan

If your business meets the following minimum requirements, then you should consider applying for an SBA loan:

  • 2+ years in business.
  • A handsome (600+) personal credit score for the business owner.
  • $100,000+ in annual revenue for your business.

Loan Application

For more detailed SBA eligibility requirements, please fill up this application or call @+1 (888) 528-0045 for more information.

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

To apply, you will provide a handful of information and documents about your business and yourself.

What are the interest rates on 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.

How to qualify for SBA Loan

Qualification 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 SBA size standards, be able to repay, and have a sound business purpose.

Even those with bad credit may qualify for startup funding.

Documents Required to apply for an SBA Loan Application

Here is a list of required documents to apply for a small Business Administration Loan.

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

Why to apply with Merchant Cash Advance 360 for an SBA Loan Program

We are a nationally-recognized, award-winning SBA Preferred Lender. We make decisions locally which makes the process quicker and easier. We 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 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. Call us today: +1 (888) 528-0045.

What are the different types of SBA loan

The type of SBA loan you need depends on what you're using the funds for and how much you want to borrow. To help make you understand better, we put together a list of five of the more common forms of SBA loans.

    • SBA 7(a) Loan

    • The most common loan available through the SBA is a 7(a) loan which provides $30,000 to $5 million to small business owners. Qualified businesses can use the funds to fund startup costs, purchase equipment, buy new land, repair existing assets, expand an existing business, acquire a new business, refinance debt, purchase inventory and supplies, and more.

      To qualify for financing, business owners need to have good credit and good business history. In most cases, borrowers will have to put up collateral to secure financing.

      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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    • SBA 504 Loan

    • Small businesses that need long-term loans for fixed asset acquisitions like buying property, buildings, or heavy equipment can find the funding they need through the SBA 504 Loan program. Borrowers can qualify for up to $5.5 million, depending on their industry.

      SBA 504 Loans have fixed rates attached to them. You can use them in a variety of ways.

      The 504 program, however, comes with some restrictions. You can not use these funds to buy inventory, consolidate debt, or as working capital.
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    • SBA Microloans

    • The SBA Microloan program offers affordable capital in lower amounts. The maximum loan amount available in this program is $50,000.

      The SBA provides funds to intermediary lenders like Merchant Cash Advance 360, and we distribute microloans to small businesses.

      SBA Microloans can be used for working capital, purchasing machinery or equipment, buying inventory or supplies, and more. The maximum term available on these loans is six years and interest rates generally fall between 8% and 13%.
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    • Community Advantage Loan

    • The Community Advantage Loan program is to support businesses that operate in underserved communities.

      Under the program, loans up to $250,000 are available to startups and established companies. Funds are relatively flexible, and you can use them to cover working capital costs, buy inventory, acquire assets, and more.

      Qualified businesses generally have between 7 to 10 years to repay the loan, plus interest.
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    • SBA 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.

      SBA Disaster loans can cover physical damage, such as the cost of repairs and replacement to a home or other building, or economic injury, which cover small-business operating expenses.

      Loans are limited to $2 million and processed through the SBA. You can view an updated list of currently declared disasters on the SBA website.
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