SBA Loans

The Different Types Of SBA Loans

SBA loans are popular due to their long repayment terms and low interest rate.  There are 6 SBA Loan Programs:

  • SBA 7(a) Loans – the most popular type of business loan for companies that need working capital up to $5 million
  • SBA CDC/504 Loans – used for purchasing owner-occupied commercial real estate
  • SBA CapLines – line of credit
  • SBA Export Loans – loans for businesses that need to finance their export activity
  • SBA Microloans – smaller loans for businesses needing working capital up to $50,000
  • SBA Disaster Loans – loans for companies that have been impacted by a natural disaster

The Details

SBA 7(a) loans are the most common type of SBA loans.  This type of loan can be used for almost any purpose, including, working capital, to refinance debt, equipment purchase, to buy a business or real estate.

Interest rates currently range from 7.5% to 10.0%.  Repayment terms are up to 10 years for unsecured loans, and up to 25 years for loans with commercial real estate collateral.

Real estate loans require 10-20% down payment.

Timing:  Your pre-qualification can happen in minutes.  Once you receive a soft pre-approval, you can expect funding to take approximately 4 weeks, but can be longer.

Requirements:  You must be in business at least 2 years.

FICO Score:  Minimum FICO is 650, but more comfortable at 680 (check yours for free).

Process:  You will need to submit your company’s last 2 years tax returns and the 6 most recent months bank statements.

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SBA CDC/504 loans are loans to small businesses looking to buy or build owner-occupied commercial real estate.  This loan is a combination of a bank lender and a CDC lender.  A CDC is a Certified Development Company.  The bank lends up to 50% and the CDC lends up to 40%.  The remaining 10% comes from the borrower.

Interest rates currently range from 4.0% to 6.0%.  Repayment terms are 10 or 20 years.

Your credit score should be at least 680 (check yours for free).

SBA CapLines provide a line of credit up to $5 million to small businesses.  This type of financing is popular for cyclical companies that need working capital through a revolving line of credit for unexpected expenses, or to prepare during downtimes. 

The SBA CapLines can be issued as a stand-alone line of credit, or in conjunction with traditional SBA 7(a) or CDC/SBA 504 loans.  The borrower must be well qualified and have a strong credit history.

Interest rates range from 7.5% to 10.5%.  Repayment terms are 5 or 10 years.

SBA Export Loans, SBA Microloans and SBA Disaster Loans are less popular and more specific loans.  For more information on these types of loans, please contact us on info@phoenixfunda.com

To read more on SBA loans, please see the following URL: https://www.sba.gov/funding-programs


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