SBA Loans - SBA loans are business loans that are partially guaranteed by the U.S. Small Business Administration (SBA). They are designed to help small businesses start, grow, or recover from various challenges. SBA loans have lower interest rates, longer repayment terms, and lower down payments than most conventional loans.
There are several types of SBA loans, each with its own purpose, eligibility criteria, and application process.
Some of the most common SBA loans are:
- 7(a) loans: The most popular and versatile SBA loan program, which can be used for working capital, equipment, inventory, real estate, debt refinancing, and more. 7(a) loans can range from $500 to $5.5 million, with terms up to 25 years, and interest rates starting at 5.5%.
- 504 loans: A loan program that provides long-term, fixed-rate financing for major fixed assets, such as land, buildings, machinery, and equipment. 504 loans are made by certified development companies (CDCs) in partnership with banks. 504 loans can range from $25,000 to $16 million, with terms up to 25 years, and interest rates starting at 3.75%.
- Microloans: A loan program that provides small loans of up to $50,000 to help startups and existing businesses with short-term needs, such as inventory, supplies, furniture, and equipment. Microloans are made by nonprofit intermediaries, such as community development organizations and microlenders. Microloans have terms up to 6 years, and interest rates ranging from 8% to 13%.
To apply for an SBA loan, you need to find a lender that participates in the SBA loan program. You can use the Lender Match tool on the SBA website to find lenders that offer the type of loan you need. You will also need to prepare a business plan, financial statements, tax returns, and other documents to demonstrate your business viability and creditworthiness.
If you want to learn more about SBA loans, you can visit the SBA website, which provides detailed information and resources on each loan program. You can also read some articles from NerdWallet, Investopedia, and Bankrate, which explain the pros and cons, eligibility requirements, and application process of SBA loans.