Government SBA loansSBA loans are funded by approved lenders. The SBA 7(a) program is the most common
SBA loan. Funds may be used to:
-
Expand or renovate facilities
- Buy machinery, equipment, fixtures, buildings and land for business
- Finance receivables and increase working capital
- Finance seasonal lines of credit
- Construct commercial buildings.
Sometimes the loans can also refinance existing debt. To qualify for a loan you cannot be a non-profit or a business involved in lending, real estate development, investments or speculation, and you
cannot exceed the size requirements. These requirements depend on your type of business.
Manufacturing | 100 employees |
Wholesaling | 100 employees |
Services and retailing | $6.5 million in receipts |
Construction | $31 million in receipts |
Agriculture | $750,000 in annual receipts |
SBA requirements
- Good character
- Management expertise and commitment to succeed
- Reasonable personal contribution or business equity
- Feasible business plan
- Sufficient collateral (although loans are not declined for insufficient collateral)
- Ability to repay loan from projected operating cash flow
Paperwork required
- Purpose of loan
- Business history
- 3 years of financial statements (if existing business)
- Schedule of debts
- Aging of accounts receivable and payable (if existing business)
- Projected opening-day balance sheet
- Any leases
- Amount of owner investment in business
- Projections of income, expenses and cash flow
- Signed personal financial statements
- Personal resumes
- Personal guarantees from principals owning 20% or more of the business.
To apply for an SBA loan, click on the "SBA approved banks" link above. These are Preferred Lenders, who can provide a
response to complete loan applications in one day. The loans can be up to 10 years for working capital; up to 25 years for fixed assets. The
interest rate typically cannot be greater than prime plus 2.75%.