Put simply, an SBA loan is a small business loan that is partially guaranteed by the government (the Small Business Administration), which eliminates some of the risk for the financial institution who is issuing the loan.
That’s right. It’s not the SBA who is doing the lending. The SBA works with a network of approved financial institutions that lend money to small businesses more frequently and with better terms because the SBA partially guarantees the loans that these lenders extend to small businesses.
This means that they will back up a part of the loan that a small business receives, so if you’re unable to pay back your SBA loan, the lender knows that the SBA will cover the portion that they guaranteed.
Because SBA loans involve a government entity, their application process is notoriously thorough and often restrictive. If you’re hoping to apply for an SBA loan, you’ll need to prepare a lot of documentation and even more patience.
Just like any other type of loan, SBA loans come in all shapes and sizes.
SBA loans can range in size anywhere from $500 to $5.5 million and can offer APR’s as low as 6.5%. Additionally, repayment terms for SBA loans can range from 5 to 25 years, but 10 years is a standard SBA loan repayment term length.
With all that said, even at their quickest, you can only fund your small business with an SBA loan if you have at least 3 weeks to spare. Bureaucracy and paperwork can really gum up a process, and if your business needs cash quick, then an SBA loan isn’t a feasible option.
SBA loans are pretty difficult to qualify for, but they come with some general minimum requirements that can help you understand if your small business is in the running for this sought-after source of funding.
If your business fulfills the following minimum requirements, then you should seriously consider applying for SBA funding:
• 3+ years of business history under your belt
• Last 3 years of both Business and Personal Tax Returns
• Year to Date P&L and Balance Sheet
• A 640+ personal credit score for the business owner
• $300,000+ in annual revenue for your business
With some of the highest loan amounts, the longest repayment terms, and the lowest APR’s available to small businesses, SBA loans are the undisputed champion of small business loans. If you can qualify for an SBA loan, then you should almost certainly consider it your very best option for business financing.
Because of our size, financial strength, and volume of loans we provide to the community we are able to approve more clients than any of our competitors. We have developed an online marketplace that matches each of our clients with the bank most likely to approve your application. Nearly 90% of the loans referred to our bank partners get approved that would otherwise be declined! If you meet all the criteria above let Express Capital get your SBA Loan approved today!