SBA 7(a) Business Loan

What is SBA business loan?

The SBA Business Loan Program involves banks directly providing loans, but with the Small Business Administration (SBA) guarantee, it becomes an SBA loan. The SBA is a federal agency that guarantees 70%-85% of the loan amount to the bank. In the event of a borrower default, the SBA pays the guaranteed amount to the bank. This reduces the risk for banks, allowing them to offer low-interest rates and extended repayment periods, making it one of the most favorable conditions among business loan programs.

 

The SBA, a federal government agency, aims to support more individuals in obtaining business loans. However, obtaining an SBA loan may not be easy for typical business owners.

Types of Regular SBA Business Loans:

SBA 7(s)

  • Loan amount up to $5,000,000. 
  • Rate: Prime + (1.75% – 4%)
  • Term: 10 years
  • Processing time:  About 3 months

SBA 7(a) Express

  • Loan amount $50,000 – $350,000 
  • Rate: Prime + ( 1.75% – 3.75%)
  • Term: 10 years
  • Processing time: 1-2 months

* What is prime rate?

 

The prime rate in the United States refers to the basic interest rate applied by banks when lending to the most creditworthy companies. The U.S. prime rate is mainly based on rates announced by leading U.S. banks such as Wells Fargo, Chase, and Citi. These banks typically lead the economy and hold important positions in the financial market, so the prime rates they announce influence the overall interest rate trend in the market. Therefore, the U.S. prime rate has a significant impact on both domestic and international financial markets and is used as the benchmark rate for various financial products such as mortgages and corporate loans.

Use of SBA loans:

  • Various purposes for business use
  • For the purpose of acquiring an existing business
  • Purchase of real estate for business use. See more detailed explanations in the real estate loan section.

There are no additional broker fees for SBA loans!

Basic Qualification Criteria and Required Documents for SBA Loans:

  • Personal credit score of 700 or above
  • Business in operation for at least 2 years U.S.
  • permanent resident or citizen
  • No record of bankruptcy or property foreclosure in the past 7 years
  • No outstanding tax liens Not currently in default or delinquent on any government loans 
  • Recent 2-3 years of business and personal tax returns
  • Year-to-date (YTD) financial statements: profit & loss, balance sheet
  • Remaining loan schedule (debt schedule)
  • Recent 6 months of bank statements