What is it?
On July 30, 1953, the U.S. Congress established the Small Business Administration agency in order to:
“to maintain and strengthen the Nation’s economy by aiding, counseling, assisting, and protecting the interests of small businesses and by helping businesses and families recover from economic and other disasters.”
Who is eligible for a SBA loan?
For-profit businesses including manufacturers, wholesalers, retailers and service businesses as well as independent or franchise businesses.
What are the requirements for a SBA loan?
Manufactures with no more than 500 employees, regardless of sales volume (depending on the industry).
Wholesalers with no more than 500 employees, regardless of sales volume.
Retailers and Service Businesses with 3-year average sales not exceeding $6-20 million (depending on the industry).
Business must have adequate historic cash flow to cover the proposed debt.
Business debt to net worth must meet industry averages.
Borrowers must be actively involved in the day-to-day operation of the business.
Satisfactory personal credit histories are required for all principles and guarantors.
No past bankruptcies or felony arrests.
SBA 7(A) Loan ($150,000 to $2.0 million)
Designed to help small entrepreneurs start or expand their businesses. The program makes capital available to small businesses through bank and non-bank lending institutions.
Loan Fees
Loan packaging fee ($750 - $2,000) is based on loan size and is collected at the time of loan submission (refunded if declined by credit).
Fee can be financed in the loan.
SBA guaranty fee: 1.70% to 2.60% of the loan amount.
Use of Proceeds
Business acquisition or expansion
Commercial real estate (purchases, construction, or refinance)
Leasehold improvements
Machinery, equipment, furniture or fixtures
Start-ups (ALL Franchises, Motels, Restaurants Gas Stations and C-Stores)
Working capital (offered in conjunction with some of the above)