SBA Loans

An SBA loan is a government-backed loan program designed to help small businesses access financing for a variety of business purposes, including working capital, equipment purchase and real estate acquisition. The loans are provided by approved lenders and guaranteed by the U.S. Small Business Administration (SBA).

SBA loans can be used for a variety of business needs, including:

• Working capital
• Equipment purchases
• Inventory purchases
• Real estate acquisition & renovation
• Business expansion
• Debt refinancing

To qualify for an SBA loan, a business must:

• Operate for profit.
• Be a small business as defined by SBA size standards.
• Do business in the United States.
• Have reasonable owner equity to invest.
• Exhaust other financing options before seeking SBA assistance.
• Owner/business occupied property.

• Loan Amount: Up to $5MM.
• Interest Rates: Typically variable rates tied to the Prime Rate plus a margin.
• Repayment Terms: Up to 25 years for real estate, 10 years for equipment and 7 years for working capital.
• Collateral: May be required, but the SBA does not deny a loan if collateral is the only issue.

The application process involves:

1. Determine Eligibility: Review the SBA’s eligibility requirements.
2. Prepare Documentation: Gather necessary documents, including a business plan, financial statements, and personal background information.
3. Submit Application: Complete the lender’s application process.
4. Lender Review: The lender reviews the application and submits it to the SBA for a guarantee.

• 3 Years of Personal & Business Tax Returns
• SBA Loan Application
• Form 4506
• SBA Form 1919
• SBA Manager’s Resume
• 3 Years of Projections
• SBA Debt Schedule
• Articles of Incorporation on Borrowing Entity
• Contractor Resume (on construction loans)
• Complete Breakdown of Construction Costs (on construction loans)
• Copies of Plans, Specs and Permits (on construction loans)
• Turnaround Time: Typically 45-60 days

The approval process for an SBA loan can take several weeks to a few months, depending on the lender and the complexity of the application. It’s important to prepare all required documentation thoroughly to expedite the process. We are here to help you through all of it!

Interest rates for SBA loans are typically variable and tied to the Prime Rate, plus an additional margin depending on many factors. The exact rate depends on the loan amount, repayment term, and the lender’s assessment of the borrower’s creditworthiness.

Fees for SBA loans may include: –

• SBA Guarantee Fee: Varies based on the loan amount & loan term.
• Packaging Fees: Charged by the lender for preparing the loan application.
• Servicing Fees: Ongoing fees charged by the lender for managing the loan.
• Closing Costs: Fees associated with closing the loan, such as legal and appraisal fees.
• Broker Fees: This is how Standout Commercial Loans makes our money.

Yes, SBA loans can be used to refinance existing business debt if it improves the terms or conditions of the debt. The new loan must provide a substantial benefit to the borrower, such as lower interest rates or longer repayment terms.

The maximum loan amount for an SBA loan is $5MM. However, the amount you can borrow depends on your business needs, the purpose of the loan, and the lender’s assessment of your ability to repay.

While collateral may be required for an SBA loan, the SBA does not deny a loan if the lack of collateral is the only reason for denial. The specific collateral requirements depend on the lender and the loan amount.

• $1,500 refundable underwriting fee is collected upfront. It is non-refundable if applicant agrees to move forward with the available option but then doesn’t close.
• Typically 1% point of the loan amount collected at loan closing.