What an SBA Loan Is
SBA Loans are part of a program created by the U.S. Small Business Administration (SBA) in order to help fund entrepreneurs like you. However, the difference between an SBA and other loans is that it’s a guarantee from banks and certified lenders. This means the SBA doesn’t actually give you money. But rather, they determine guidelines for lenders and guarantee applicants up to 85% of the loan. This way, the lenders remain protected from potential defaults and it allows for them to provide funding for entrepreneurs with very little risk.
Types Of SBA Loans And Which Ones Are Best For You
For entrepreneurs like you, there are a few types of SBA Loans. The main two are the 7(a) Loan Program and the CDC/504 Loan Program. To help you out, we’ll explain what each of them does.
7(a) Loan Program:
The 7(a) Loan Program is pretty flexible for your entrepreneurial needs. However, the primary uses include: refinancing existing property, purchase new property, revolving funds, equipment purchases, working capital, and the purchase of real estate. You can receive upwards of $5 million in guaranteed financing and applications are processed through banks, certified lenders, and credit unions.
CDC/504 Loan Program:
The CDC/504 Loan Program is primarily used by Entrepreneurs like you for project funding. When your loan is approved, you’ll receive 50% of the money from the bank and 40% of it from a Certified Development Corporation (CDC). In this instance, project funding means fixed assets, and some fixed assets include: buying equipment, buildings, land, building/renovating new/existing facilities, landscaping, and debt refinancing due to renovations/improvements. You can receive upwards of $5 million in finances and applications are processed through non-profits and private-sector lenders.
Who Qualifies For An SBA Loan: The Three Cs
Small and new businesses can qualify for an SBA loan. However, SBA loans depend greatly on your credit score. Business owners with great scores and a good borrowing history are the most likely candidates to get qualified.
When you’re looking into loans, Finance Factory looks at the Three Cs: Credit, Cash flow, and Collateral. You’ll want to have a credit score between 600 and 800– with an ideal score of 700+. But we’ll also look for a minimum account balance of $1,000 – $5,000 for monthly cash flow (but also look at tax returns, profit, and annual revenue). As for collateral, we prioritize unsecured funding; however, collateral is just one option. As long as you have one of the Three Cs, you’ll qualify for a loan.
It’s important to understand that businesses younger than 2 years or guarantors with poor credit scores will have a harder time qualifying. SBA lenders need to know you’re reliable and not a risk.
Ideal Annual Revenue
Ideal Credit Score
600 – 800
Time In Business
How SBA Loans Work
When it comes to SBA Loans, most small business owners want to know what they can do in order to qualify. They are one of the best loans out in terms of rates and costs; however, they are aren’t the easiest loans to qualify for.
Here at Finance Factory, we’ve helped many small business owners successfully apply and qualify for SBA loans. We have an incredible amount of experience with a passionate team specialized in guiding you during the application process.
We understand the ins-and-outs of SBA loans and exactly what it takes for you to qualify. We’ll also help find the best product for you.
SBA Loan Fundamentals
“SBA” stands for the Small Business Administration. The Small Business Administration is a Government Program and Agency designed to assist entrepreneurs grow their businesses by granting access to the finances they need.
However, a common misconception when it comes to SBA loans is that the Small Business Administration is the lender. In actuality, the SBA provides borrowers with a guarantee of a bank loan. By doing so, the SBA uses government money to guarantee a percentage (up to 85%) of the loans by banks. This gives the banks a greater incentive to lend their money out to small business owners since there is less of a risk.
How To Apply / Documents Needed
Most banks, both local and large, offer small business owners SBA loans. However, certified alternative financial institutions also can help you get an SBA. The process itself is relatively long and there’s quite a bit of information needed in order to be processed and approved.
Business Debt Schedule
Business Tax Returns
Business Cash Flow
Personal Tax Returns
Personal Credit history
Voided business Check
State / Location Of Business / Officers
Non-SBA Loan Options: BA Working Capital And Debt Refinancing Loans
The best way for most businesses to get essential funds to successfully run daily operations and to save on high interest debt. You can use this loan option for debt refinancing, business expansion, increase products and services, marketing, hire new employees, purchase equipment, increase inventory, and to attract new prospects and grow your customer base. BA Working Capital And Debt Refinancing Loans can give you upwards of $30,000 – $350,000.
Non-SBA Loan Options: Non-SBA
The right financing option when you aren’t quite ready for an SBA loan. You can use this loan for debt refinancing, pay off high-interest debt and increase monthly cash flow, working capital, hire additional staff, inventory, and buy new equipment. Non-SBA Loans can give you upwards of $30,000 – $200,000.
Non- SBA Loan Options: Business Express Loans
These are non-SBA loans and lines of credit up to $500,000. They can fund in as little as 1-2 weeks and require you have an existing business with revenue. We have a large network of non-bank, secondary market lenders, and we know what requirements they need met in order to approve and issue funds. We will pre-qualify and package your application, then walk you through the entire process to funding.
Finance Factory Helps You Find The Best SBA Loans For Your Business
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days and have a credit score of 600 – 800, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!
Fast, Easy, & Secure
Use our secure software to prequalify in less than 5 minutes without impacting your credit score. Get funds as fast as 7 days after your application is complete.
Streamlined Online App
We’ve streamlined the loan application process so you only complete one application when you apply for an SBA loan.