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SBA Loans

The Ultimate Guide
by FitSmallBusiness.com
The

sets the guidelines
for the approval of loans
and guarantees part of
their repayment.
The

sets the guidelines
for the approval of loans
and guarantees part of
their repayment.
This guarantee lowers the risk for SBA
lending partners which include banks,
community development organizations, and
micro-lending institutions.
SBA loans

often have:
SBA loans

often have:

• Lower interest rates.
SBA loans

• Lower interest rates.
often have: • Longer repayment periods.
SBA loans

• Lower interest rates.
often have: • Longer repayment periods.
• And other more favorable
terms than non-SBA loans.
The Personal

Guarantee
The Personal

Guarantee
All SBA loans require personal guarantees for
every owner of at least 20% of the business
Your home
may be included as

collateral
Your home
may be included as

collateral

But this depends on the
value of the assets already
pledged as collateral and
the size of the loan.
The
May require a professional
appraisal of both your business
and personal assets.
The
May require a professional
appraisal of both your business
and personal assets.
For more information on SBA loan collateral
and the personal guarantee, see this page.
SBA loans
Types:

• The 7a General Small

Business Loan
• The 7a SBA Express
• The CDC/504 Real Estate
and Equipment Loan
• Disaster Loans
SBA loans
Types:

• The 7a General Small

Business Loan
• The 7a SBA Express
• The CDC/504 Real Estate
and Equipment Loan
• Disaster Loans
These loan programs have different purposes
and terms, which this guide will explore in order
to help you understand which SBA loan is best
for you and your small business.
The 7a General
Small Business Loan
The 7a General
Small Business Loan

Is appropriate for most
types of business. One well
known use of a 7a loan is
for the purchase of a
franchise.
7a Loans

Can also be used for a wide range of other purposes.
7a Loans

Can also be used for a wide range of other purposes.
• Long or short-term working capital
• Purchase equipment and real estate
• Construction
• Business acquisition
• Refinancing
There is

no minimum

loan amount for the 7a, and
the maximum is

$5 million.
The 7a SBA
EXpress
The 7a SBA
EXpress

Guarantees a response to an

application within 36 hours.
The 7a SBA
EXpress

Guarantees a response to an

application within 36 hours.
Follows the same guidelines as the
standard 7a but the maximum loan
amount is $350,000.
There is no defined

interest rate

On 7a loan, since the actual interest
rate is negotiated between the
applicant and lender, subject to an
SBA maximum.
There is no defined

interest rate

On 7a loan, since the actual interest
rate is negotiated between the
applicant and lender, subject to an
SBA maximum.
The maximum interest rate is likely to be several
percentage points lower than an equivalent non-SBA loan.
Maximum interest rates that you would pay
based on the prime rate at the time this
presentation was written.
Less Than $25K
Loans With Terms
Under 7 Year
Loans With Terms of
7 Years or Greater

$25k - 50K

Over $50K

3.25% (base rate) +
4.25% (markup)=

3.25% + 3.25% =

3.25% + 2.25% =

7.5%

6.5%

5.5%

3.25% + 4.75% =

3.25% + 3.75% =

3.25% + 3.75% =

9.0%

8.0%

7.0%
The 7a SBA

Qualifications

According to the SBA, in order to
be eligible for a 7a loan

your businesses must:
The 7a SBA

Qualifications

• Have reasonable invested
equity.

•Use the funds for a sound
business purpose.
The 7a SBA

Qualifications

• Use alternative financial

resources, including personal
assets, before seeking financial
assistance.
The 7a SBA

Qualifications

•Be able to demonstrate a

need for the loan proceeds.
•Not be delinquent on any
existing debt obligations to
the U.S. government.
The 7a SBA

Qualifications

•Be able to demonstrate a

For comprehensive eligibility information,
go here.

need for the loan proceeds.
•Not be delinquent on any
existing debt obligations to
the U.S. government.
CDC/504 Loan
Real Estate and Equipment
The
CDC/504 Loan
Real Estate and Equipment
The

Is a more specialized form
of SBA loan designed
specifically for large
capital investments in
equipment and property.
CDC/504 Loan
Real Estate and Equipment
The

Can be used to purchase
land, make improvements
to existing facilities,
construct new facilities,
and purchase long-term
machinery and equipment.
CDC/504 Loan
Real Estate and Equipment
The

(for a comprehensive list of 7a loan uses, see
this article).

Can be used to purchase
land, make improvements
to existing facilities,
construct new facilities,
and purchase long-term
machinery and equipment.
The maximum
loan amount for a

CDC/504 loan
ranges between

$4-5.5 million
But the exact amount depends
on how your small business
plans on using the loan in
relation to job creation and
public policy.
But the exact amount depends
on how your small business
plans on using the loan in
relation to job creation and
public policy.
For a more detailed explanation check
our main article here.
The

CDC/504

Qualifications

• Have a tangible net worth less

than $15 million and an average net
income less than $5 million after
taxes for the preceding two years.
The

CDC/504

Qualifications

• Not be engaged in speculation or
investment in rental real estate.
The

CDC/504

Qualifications

• Not be engaged in speculation or
investment in rental real estate.
• Not have funds available from
other sources.
The

CDC/504

Qualifications

• Have the ability to repay the loan

on time from the projected
operating cash flow of the
business
Disaster Loans
Disaster Loans
The SBA offers a number of
different disaster loans, but
the two types relevant to
small business owners are:
Disaster Loans
“Business Physical
Disaster Loans”

“Economic Injury
Disaster Loans”
You may be eligible for a

Business Physical
Disaster Loan
If your business has been
damaged by a disaster
that is in a declared
disaster area.
Businesses are eligible
for loans up to

$2 million
Businesses are eligible
for loans up to

$2 million
Which can be used for the repair
or replacement of real property,
machinery, equipment, and
inventory.
You may be eligible for an

Economic Injury Disaster Loan
If your small business, small
agricultural cooperative, or nonprofit organization has suffered
substantial economic injury as a
result of a disaster.
Substantial
economic injury
Is defined as your business being
“unable to meet its obligations and
to pay its ordinary and necessary
operating expenses.”
These loans are up to $2 million
with a maximum repayment term of 30
years.
These loans are up to $2 million
with a maximum repayment term of 30
years.
For more comprehensive information on
Economic Injury Disaster Loans, see this article.
disaster loan
interest rate
For “Business Physical Disaster Loans”
Interest rates will be less than 4 %
if credit is not available elsewhere
And less than 8% percent if credit is available
elsewhere.
disaster loans
interest rate
For “Economic Injury
Disaster Loans”
interest rates will be less than 4%
And Finally...
To learn how to
simplify the process of
running your business
visit us at....
www.FitsmallBusiness.com
Thanks for watching

Click here to tweet this
presentation.

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Sba Loans - The Ultimate Guide

  • 1. SBA Loans The Ultimate Guide by FitSmallBusiness.com
  • 2. The sets the guidelines for the approval of loans and guarantees part of their repayment.
  • 3. The sets the guidelines for the approval of loans and guarantees part of their repayment. This guarantee lowers the risk for SBA lending partners which include banks, community development organizations, and micro-lending institutions.
  • 5. SBA loans often have: • Lower interest rates.
  • 6. SBA loans • Lower interest rates. often have: • Longer repayment periods.
  • 7. SBA loans • Lower interest rates. often have: • Longer repayment periods. • And other more favorable terms than non-SBA loans.
  • 9. The Personal Guarantee All SBA loans require personal guarantees for every owner of at least 20% of the business
  • 10. Your home may be included as collateral
  • 11. Your home may be included as collateral But this depends on the value of the assets already pledged as collateral and the size of the loan.
  • 12. The May require a professional appraisal of both your business and personal assets.
  • 13. The May require a professional appraisal of both your business and personal assets. For more information on SBA loan collateral and the personal guarantee, see this page.
  • 14. SBA loans Types: • The 7a General Small Business Loan • The 7a SBA Express • The CDC/504 Real Estate and Equipment Loan • Disaster Loans
  • 15. SBA loans Types: • The 7a General Small Business Loan • The 7a SBA Express • The CDC/504 Real Estate and Equipment Loan • Disaster Loans These loan programs have different purposes and terms, which this guide will explore in order to help you understand which SBA loan is best for you and your small business.
  • 16. The 7a General Small Business Loan
  • 17. The 7a General Small Business Loan Is appropriate for most types of business. One well known use of a 7a loan is for the purchase of a franchise.
  • 18. 7a Loans Can also be used for a wide range of other purposes.
  • 19. 7a Loans Can also be used for a wide range of other purposes. • Long or short-term working capital • Purchase equipment and real estate • Construction • Business acquisition • Refinancing
  • 20. There is no minimum loan amount for the 7a, and the maximum is $5 million.
  • 22. The 7a SBA EXpress Guarantees a response to an application within 36 hours.
  • 23. The 7a SBA EXpress Guarantees a response to an application within 36 hours. Follows the same guidelines as the standard 7a but the maximum loan amount is $350,000.
  • 24. There is no defined interest rate On 7a loan, since the actual interest rate is negotiated between the applicant and lender, subject to an SBA maximum.
  • 25. There is no defined interest rate On 7a loan, since the actual interest rate is negotiated between the applicant and lender, subject to an SBA maximum. The maximum interest rate is likely to be several percentage points lower than an equivalent non-SBA loan.
  • 26. Maximum interest rates that you would pay based on the prime rate at the time this presentation was written. Less Than $25K Loans With Terms Under 7 Year Loans With Terms of 7 Years or Greater $25k - 50K Over $50K 3.25% (base rate) + 4.25% (markup)= 3.25% + 3.25% = 3.25% + 2.25% = 7.5% 6.5% 5.5% 3.25% + 4.75% = 3.25% + 3.75% = 3.25% + 3.75% = 9.0% 8.0% 7.0%
  • 27. The 7a SBA Qualifications According to the SBA, in order to be eligible for a 7a loan your businesses must:
  • 28. The 7a SBA Qualifications • Have reasonable invested equity. •Use the funds for a sound business purpose.
  • 29. The 7a SBA Qualifications • Use alternative financial resources, including personal assets, before seeking financial assistance.
  • 30. The 7a SBA Qualifications •Be able to demonstrate a need for the loan proceeds. •Not be delinquent on any existing debt obligations to the U.S. government.
  • 31. The 7a SBA Qualifications •Be able to demonstrate a For comprehensive eligibility information, go here. need for the loan proceeds. •Not be delinquent on any existing debt obligations to the U.S. government.
  • 32. CDC/504 Loan Real Estate and Equipment The
  • 33. CDC/504 Loan Real Estate and Equipment The Is a more specialized form of SBA loan designed specifically for large capital investments in equipment and property.
  • 34. CDC/504 Loan Real Estate and Equipment The Can be used to purchase land, make improvements to existing facilities, construct new facilities, and purchase long-term machinery and equipment.
  • 35. CDC/504 Loan Real Estate and Equipment The (for a comprehensive list of 7a loan uses, see this article). Can be used to purchase land, make improvements to existing facilities, construct new facilities, and purchase long-term machinery and equipment.
  • 36. The maximum loan amount for a CDC/504 loan ranges between $4-5.5 million
  • 37. But the exact amount depends on how your small business plans on using the loan in relation to job creation and public policy.
  • 38. But the exact amount depends on how your small business plans on using the loan in relation to job creation and public policy. For a more detailed explanation check our main article here.
  • 39. The CDC/504 Qualifications • Have a tangible net worth less than $15 million and an average net income less than $5 million after taxes for the preceding two years.
  • 40. The CDC/504 Qualifications • Not be engaged in speculation or investment in rental real estate.
  • 41. The CDC/504 Qualifications • Not be engaged in speculation or investment in rental real estate. • Not have funds available from other sources.
  • 42. The CDC/504 Qualifications • Have the ability to repay the loan on time from the projected operating cash flow of the business
  • 44. Disaster Loans The SBA offers a number of different disaster loans, but the two types relevant to small business owners are:
  • 45. Disaster Loans “Business Physical Disaster Loans” “Economic Injury Disaster Loans”
  • 46. You may be eligible for a Business Physical Disaster Loan If your business has been damaged by a disaster that is in a declared disaster area.
  • 47. Businesses are eligible for loans up to $2 million
  • 48. Businesses are eligible for loans up to $2 million Which can be used for the repair or replacement of real property, machinery, equipment, and inventory.
  • 49. You may be eligible for an Economic Injury Disaster Loan If your small business, small agricultural cooperative, or nonprofit organization has suffered substantial economic injury as a result of a disaster.
  • 50. Substantial economic injury Is defined as your business being “unable to meet its obligations and to pay its ordinary and necessary operating expenses.”
  • 51. These loans are up to $2 million with a maximum repayment term of 30 years.
  • 52. These loans are up to $2 million with a maximum repayment term of 30 years. For more comprehensive information on Economic Injury Disaster Loans, see this article.
  • 53. disaster loan interest rate For “Business Physical Disaster Loans” Interest rates will be less than 4 % if credit is not available elsewhere And less than 8% percent if credit is available elsewhere.
  • 54. disaster loans interest rate For “Economic Injury Disaster Loans” interest rates will be less than 4%
  • 56. To learn how to simplify the process of running your business visit us at....
  • 57. www.FitsmallBusiness.com Thanks for watching Click here to tweet this presentation.