SBA Loans Payment Types
& Requirements

Overview of SBA Loans

Are you a small business owner who's frustrated with getting financing for your company?

Well, we can't blame you. Securing funding can be difficult for small business owners because you have the deck stacked against you. Banks usually favor bigger ventures with plenty of assets and excellent financial history.

Entrepreneurs don't always have this luxury.

That's why the Small Business

Administration introduced SBA loans. It levels the playing field for owners to have a chance at business success. In this article, we'll discuss SBA loans, what the requirements are, and what you can use them for.

You have questions, we've got answers

What is an SBA Loan?

SBA loans are financial assistance that’s offered and guaranteed by the U.S. Small Business Administration (SBA). It's aimed at giving loans to small and medium-sized businesses, who don't have access to significant capital usually offered by banks.

A common misconception is that the SBA is the one who issues the small loans to businesses—that's not entirely accurate. Instead, it partners with other lenders and institutions who give the loan. The SBA simply co-signs and guarantees the loan for qualified entrepreneurs. They, however, guarantee a big chunk of that loan—up to 90% of the total amount.

Small business administration loans are fantastic if you don’t have the collateral or long credit history that big banks usually require. It gives entrepreneurs like you a fighting chance to make your business succeed. Small business loans are your lifeline to help your business, especially during difficult times.

Different Types Of SBA Loans

There are several types of SBA loans, each with a purpose tied to them. Certain loan types only allow you to use it in specific situations, so you need to do your research beforehand.

The 7(a) Loan Program is the flagship SBA loan. It's the most flexible type that can be used in a wide variety of situations. Businesses can borrow up to $2 million, with a maturity period of 10 years for working capital and 25 years for fixed assets.

Within the 7(a) Loan Program, there are also subcategories for specific situations. The Express Program, for instance, is for business owners who need funding within 36 hours. Another one is the Rural Lender Advantage Program, which is for businesses in disadvantaged rural communities.

Another type of SBA loan is the CDC/504 Loan Program. This is for the specific purpose of acquiring assets for business expansion. For small, short term financing, the Microloan Program offers quick loans of up to $35,000.

Benefits of an SBA Loan

SBA loans give small businesses access to capital that they can't typically get a hold of due to strict bank requirements.

Despite this, SBA loans give competitive rates that are comparable to a non-guaranteed loan. You get loan amounts without the need to have any collateral in most instances. It’s the best of both worlds!

SBA loan payment terms are also very flexible and affordable. The goal is to not put a strain on the already demanding overhead most small business owners experience.

And to increase your chances of success, SBA also provides continuing education and counseling for entrepreneurs.