SBA Lending

One of the big advantages of SBA loans is that they offer lower down payments and longer loan terms compared to conventional loans. Because of that, SBA loans are more accessible to small business owners who want to grow their business and have access to much-needed capital.

The down payment for an SBA loan can be as little as 10 percent, versus up to 35 percent on conventional loans. The loan repayment is stretched over a longer period of time (up to 25 years), which keeps the monthly payments low and allows business owners to keep more working capital in their business.

Additionally, all SBA loans are fully amortized, and no balloon payments (large lump sums that are significantly higher than all the payments made before) are required at the end of the loan term. And, with a fully amortized loan, you never have to refinance, which saves the borrower time and money, as well as the hassle that goes along with having to apply for a new loan.

SBA loans can support different financing needs of small businesses, including commercial real estate purchases and refinancing, equipment purchases, existing debt refinancing, tenant improvements, business acquisitions, partner buyouts, construction, inventory purchases, working capital, and more. Additionally, SBA loans can provide financing for businesses that often find it difficult to obtain conventional financing. These businesses include restaurants, hotels, auto repair facilities, self-storage facilities, gas stations, car washes, and assisted living facilities.

To be considered for an SBA loan, the business must be for-profit, must operate and be physically located in the U.S. or its territories, and must meet the SBA size standards. A vast majority of businesses in the United States are eligible to apply for SBA loans. To qualify, the business must have a tangible net worth of $15 million or less and an average net income of $5 million or less. The business should also have the sufficient historical cash flow to show that it can pay back the loan, have a sound business purpose, and its owners must be U.S. citizens or permanent residents who have a strong borrowing history (credit score).

The exact amount of the down payment depends on the type of SBA loan you are looking to get and the financial institution you are working with. For SBA 7(a) loans, a down payment can be as little as 10 percent. In some cases, the SBA may require the borrower to provide a slightly higher down payment or some additional collateral.

To apply for an SBA loan, you should work with a lender that is experienced in making SBA loans and has a qualified staff of SBA lending professionals. That means they have a proven track record of successfully processing SBA-guaranteed loans and have the authority to approve SBA loans unilaterally, which speeds up the process. If you are applying for an SBA loan through a bank, you should contact an SBA business development officer or relationship manager. They will explain the process, provide all the necessary loan application forms, and help you with any questions you might have. After gathering all the paperwork and filling out the application forms, you submit your loan application to your lender so that they can underwrite, approve and close your SBA loan.

The approval process for an SBA loan depends on the type of the loan you are applying for and the type of lender you are using. For an SBA (7) loan, the turnaround time can be as little as 45 days if you use an experienced PLP lender like us. Preferred lenders have the full authority to make the final credit decision on their own, which allows for faster approvals and expedites the overall process. Once a preferred lender receives the borrower’s final information and loan application forms, they can usually make a preliminary credit decision within a few business days. The entire process (from loan application to funding) typically takes about 45-60 days.