SBA Loan | SBA Loan for Small Business

Business Banking Small Business Administration Small Business Administration Loans

Our Small Business Administration (SBA) loans are the perfect solution for your business. Please read more about each of our offerings, and learn more about the eligibility requirements and uses.

SBA Loan Details

SBA 504 Loans

Part bank loan and part bond financing provided by sale of 100% SBA-guaranteed bond (debenture) into the capital markets, fully amortizing 20-year fixed loans:

The bank loan has no specified limit, but is typically limited to 50% of the project costs, with the SBA debenture covering the next 30% – 40%, and borrower equity of 10% – 20%
SBA’s portion is limited to $5,000,000 aggregate SBA outstandings (for most borrowers), but can be expanded to $5,500,000 per project for manufacturers or projects that include small scale renewable energy production
Maximum project size can exceed $15,000,000

May only be used for owner-occupied real estate and equipment projects. Can be used as permanent financing after conventional construction financing or draw financing to build and install equipment:

20 year bond for real estate projects
10 year bond for capital equipment projects
10 year full term bank portion fully amortizing for equipment
10 year term with 20 or 25 year bank portion amortization for real estate

Structure:

Part bank loan and part bond financing. Bond funds are provided by sale of 100% SBA-guaranteed bond (debenture) into the capital markets, fully amortizing 20-year fixed loans.

Use of funds:

May only be used for owner-occupied real estate and capital equipment projects.

Minimum required down payments:

10% for existing businesses purchasing general purpose real estate or equipment
15% for businesses less than 2 years old purchasing general purpose real estate or equipment
15% for existing businesses purchasing limited purpose real estate (beginning 1/1/2018, 20% will be required for borrowers with existing SBA 504 loans)
20% for businesses less than 2 years old purchasing limited purpose real estate

Typically, the project collateral is the only required collateral, but additional collateral may be required during construction.

SBA 7a Small Loans
A bank term loan with a partial government guaranty:

85% on loans up to $150,000
75% on loans over $150,000
Maximum loan size of $350,000

Plus:

Up to a 1 year draw period, term out over remaining term
The maximum term is based on the use of funds, and can be used for any eligible purchase
Simpler underwriting and collateral requirements (for most borrowers)
Must meet SBA’s minimum Small Business Credit Score and demonstrate the ability to repay from business’ cash flow to qualify

All eligible uses of funds except temporary working capital (revolving loan structure):

Purchasing a business
Purchasing inventory or equipment
Purchasing real estate
Constructing a building
Funding tenant improvements
Providing working capital

SBA 7a Large Loans

A bank term loan with a partial government guaranty:

75% on loans from $350,000 to $5,000,000

Plus:

Up to a 1 year draw period, term out over remaining term
The maximum term is based on the use of funds, and can be used for any eligible purchase
Collateral requirements include:
- 1st lien on assets purchased with proceeds, plus worthwhile assets
- If not fully secured, a lien on the owners’ personal real estate and life insurance may be required

All eligible uses of funds except temporary working capital (revolving loan structure):

Purchasing a business
Purchasing inventory or equipment
Purchasing real estate
Constructing a building
Funding tenant improvements
Providing working capital

SBAExpress Lines of Credit
A bank revolving line of credit with partial government guaranty:

50% on loans up to the maximum of $350,000
Maximum 10 year term
Structured with up to a 5 year revolving period followed by a 5 year term loan, with annual reviews

Plus:

An annual review to inspect usage of line, ability to repay, and adverse changes in borrower or guarantor, and will determine whether the line is:
- Automatically renewed as a revolving line for the next year
- Converted to term over the remaining term
Collateral is typically a first lien on accounts receivable and inventory, plus a lien on other business assets
Typically not available to new businesses, a 7a term loan will be used instead

These funds are eligible for funding temporary working capital needs based on accounts receivable and inventory.

SBA Working Capital CAPlines
A bank revolving line of credit with partial government guaranty:

75% on loans up to the maximum of $5,000,000

Plus:

Can be renewed annually for up to 10 years under the same up-front guaranty fee
Lines up to $1,000,000 must be fully secured with accounts receivable and inventory under a borrowing base or with fixed assets or real estate without a borrowing base
Lines over $1,000,000 must be fully secured with accounts receivable and inventory under a borrowing base

SBA Export Express
A bank revolving line of credit with partial government guaranty:

75% on loans over $350,000
90% on loans up to $350,000
Maximum 7 year term
Structured with up to a 3 year revolving period followed by a 4 year term loan, with annual reviews
Maximum loan size of $500,000

Plus:

Funds may be used to support export sales
An annual review to inspect usage of line, ability to repay, and adverse changes in borrower or guarantor, and will determine whether the line is:
- Automatically renewed
- Converted to term
Collateral is typically a 1st lien on accounts receivable and inventory, plus a lien on other business assets
Typically not available to new businesses, a 7a term loan will be used instead
Requires business plan documenting how the funds will help expand export sales

These funds are eligible for funding temporary working capital needs to support export sales.

International Trade Loans
A bank term loan with partial government guaranty:

75% for mixed use loans or loans used for working capital
90% of loans used for real estate or fixed assets
Maximum loan size of $5,000,000

Plus:

Up to 1 year draw period, term out over remaining term
The maximum term is based on the use of funds. These loans can be used for any eligible purchase, except temporary working capital
Collateral requirements include:
- 1st lien on assets purchased with proceeds, plus worthwhile assets
- If not fully secured, a lien on the owners’ personal real estate and life insurance may be required
Require business plan documenting how the funds will help the business expand export markets or respond to foreign competition

Veteran’s Advantage Program
A special program offering guaranty fee discounts to businesses 51% or more owned by veterans and/or their spouses. For fiscal year ending 9/30/2018:

No fee SBA Express Loans up to $350,000
No fee SBA 7a Small Loans up to $125,000
SBA 7a Small Loans and Large Loans up to $350,000 (50% discount on the normal guaranty fee)

For more information about our Small Business Administration loans please contact one of our Small Business Administration experts, or send us your contact information and we’ll reach out to you.

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Our team is comprised of experts in Small Business Administration lending and has the knowledge to guide your business through the entire loan process.

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Small Business Administration (SBA)

SBA stands for U.S Small Business Administration, a government agency that provides support and resources for entrepreneurs and small businesses.
Yes. We offer a variety of SBA loan solutions with a commitment to work closely with you to identify your needs and find a program that works for you and your business.
We offer SBA 7a loans, SBA 504 loans, SBA Express, SBA Working Capital CAPLines and loan programs for veterans.
SBA loans are typically used to for business expansion, purchasing a business, purchasing real estate for your small business, purchasing equipment, construction or tenant improvements, financing accounts receivables and inventory, and funding start ups.
- If your business is growing, you need to preserve as much capital for reinvestment into that growth. SBA loans allow both lower down payments and longer terms than conventional loans. As a result, you will have more money for reinvestment.
- If you are buying a business or need funds to expand your business, SBA is often the only way the loan can be approved because you need a longer term to repay and you need the bank to overlook a shortfall in collateral.
- If you are buying real estate or equipment, the lower down payment typically means that you can maximize your return on investment because your business should generate a higher return than the real estate
- Finally, SBA often means you can afford to expand your business sooner than you would qualify conventionally.
SBA guarantees allow the bank to overlook certain risks that would not be approved conventionally. The SBA guaranty is not a substitute for a personal guaranty or collateral. The SBA requires that we do all that we can to reduce the risk to the taxpayer (since this is a government guaranteed program). All 20% or more owners must guaranty the loan, and if the assets purchased with proceeds are not sufficient to fully secure the loan, there is a shortfall of collateral, they must pledge any personally owned real estate with 25% or more equity, and may be required to provide an assignment of life insurance.
- Since 2004, the fees on SBA 7a loans have been matched to long-term loss rates in the program. The fees cover the costs of the SBA guarantees that are paid when a borrower fails and the guaranty is called upon. That means the SBA program is permanently self-funded and these loans are not funded by taxpayer dollars.
- The fees allow the programs to exist to support entrepreneurship and economic development in our communities. The fees are similar to mortgage insurance premiums, which allow higher advance rates and more flexible underwriting requirements than conventional loans.
- A loan approval when you otherwise wouldn’t qualify.
- A lower down payment, which allows you to invest in other growth opportunities sooner.
- A longer time to repay, which allows you to more easily afford the payments.
- Funding when collateral doesn’t fully support the request.
- No. Some of the most well-known brands in the country have used SBA loans to support their growth. SBA loans exist to help growing small businesses gain access to capital when conventional loans don’t quite fit. SBA loans offer borrowers access to more financing over longer terms, and that means they can expand earlier and take the savings and reinvest it in growth. That means more jobs and a more robust local economy, which generates more taxes.
- SBA loans are available to businesses with annual net profit after tax as high as $5,000,000 and tangible net worth as high as $15,000,000.
- Under the SBA 7a Program, a borrower and its affiliates can qualify for as much as $5,000,000 in total outstanding SBA guaranteed loans. In most cases, the maximum guaranty allowed is $3,750,000; but exporters can qualify for as much as $4,500,000 in guaranty under the International Trade Loan, Export Working Capital, and Export Express loan programs.
- Under the SBA 504 Program, most borrowers can qualify for as much as $5,000,000 in aggregate outstanding guarantees (100% of the bond is guaranteed). Manufacturers and projects that qualify under special energy production and reduction programs can boost the limit to $5,500,000 for each project. Since the 504 program is part bank loan and part SBA bond financing, the limit is much higher and (for very strong clients) can exceed $13,750,000 per project.
Yes, we have many clients that have multiple SBA loans. Those loans have allowed them to buy a business, purchase their owner-occupied real estate, purchase equipment, expand their business, and provided access to permanent and temporary working capital.
- Temporary working capital should be thought of as the amount needed to support fluctuations in the timing between paying for inventory or labor and getting paid by your client. Here, the working capital is used temporarily and repaid when your client pays you for the service.
- Permanent working capital is needed when a business adds a location, product line, or service and needs to invest in one-time marketing, expanded staffing or builds up permanent levels of inventory and accounts receivable. Here, the working capital gets used up over a short period of time as the investment is made, and gets repaid from profits over a longer period of time.
Because we have demonstrated a proficiency in processing and servicing SBA-guaranteed loans, we have been designated as an SBA Preferred Lender. That means we can streamline the loan process by making decisions and servicing the loan locally.
SBA loans are backed by the U.S Small Business Administration and have different eligibility requirements than small business loans.