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SBA Loan Programs: Find the Best Loan for Your Business

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The Small Business Administration (SBA) offers multiple SBA loan programs, which can make finding the right loan for your business a challenge. You can use some loans for general business financing, while other loans, like the SBA 504 loan, are specifically for financing major fixed assets. Understanding your needs can help match you with the right SBA business loan program.

What is the SBA loan program?

The SBA partners with lenders to create financing solutions for small businesses. The largest SBA loan programs include the SBA 7(a), 504 and microloan, as well as disaster loans that include funding for businesses suffering economic injury from COVID-19. In addition, the SBA rolled out the Paycheck Protection Program (PPP) in 2020, providing small businesses financial relief during the coronavirus pandemic.

Which SBA program is right for my business?

The SBA program that’s right for your company will depend on the amount you’re seeking as well as the purpose of the loan.

SBA Loan Programs: At a Glance
Loan program Max. Loan Amount  Max. Terms and Interest Rates Best For
SBA 7(a) Loan $5 million Up to 25 years
Fixed: Up to 11.25%*
Variable: Up to 8%*
General business financing
SBA 504 Loan $5.5 million Up to 25 years
See below for rates
Financing major fixed assets
SBA Express Loan $1 million** Up to 25 years
Up to 9.75%*
Fast turnaround (36 hours)
Export Express $500,000 Up to 7 years if used as a line of credit
Up to 9.75%*
Export companies requiring fast turnaround (24 hours)
Export Working Capital $5 million Up to 12 months if used as a line of credit
Interest rate set by the lender. No SBA maximum.
Export companies in need of working capital
Community Advantage*** $250,000 Up to 25 years
Up to 9.25%*
Underserved markets
CAPLines $5 million Up to 10 years
Fixed: Up to 8%*
Variable: Up to 11.25%*
Lines of credit for short-term or cyclical financing
Microloans $50,000 Up to 7 years
Up to 8.5% + intermediary’s costs****
Women, low-income, veteran and minority entrepreneurs requiring smaller loan amounts
Economic Injury Disaster Loans (EIDL) 6 months of working capital Up to 30 years
Up to 3.75%
Small businesses affected by declared disasters
PPP Loans $10 million Up to 10 years
Up to 4%
Retaining workforce during coronavirus pandemic
Physical Damage Loans $2 million Up to 30 years
Up to 4% if you cannot obtain financing elsewhere, and up to 8% if you can
Repairing physical damages from a declared disaster

*Based on a prime rate of 3.25%
**Reverts to $350,000 on Oct. 1, 2021
***Expires Sept. 30, 2022
****Rates based on the five-year Treasury rate

SBA 7(a) loan program

The SBA 7(a) loan program is the SBA’s primary product for general financing. With favorable rates and terms, the standard 7(a) loan is the most popular SBA program available today — more than 42,000 7(a) loans were made in fiscal year 2020, at a total of $22.55 billion.

Uses
  • Purchase land or buildings
  • Purchase and install fixed assets
  • Construct new buildings
  • Purchase inventory and supplies
  • Working capital
  • Refinance some outstanding debts
Loan amounts

The maximum loan amount for the 7(a) loan is $5 million.

Rates and terms

Repayment terms can extend up to 25 years with fixed or variable interest rates based on the federal prime rate.

SBA 7(a) Maximum Fixed Interest Rates*
Loan Amount Maximum Fixed Rate
$25,000 or less 11.25%
$25,001-$50,000 10.25%
$50,001-$250,000 9.25%
More than $250,000 8.25%

*As of Jan. 7, 2021

SBA 7(a) Maximum Variable Interest Rates*
Loan Amount Maturity < 7 Years Maturity > 7 Years
$25,000 or less 7.5% 8%
$25,001-$50,000 6.5% 7%
More than $50,000 5.5% 6%

*As of Jan. 7, 2021

How to apply

To qualify for a standard 7(a) loan, businesses must meet eligibility requirements, including:

  • Operating for profit
  • Operating within the U.S. or U.S. territories
  • The business owner having equity invested in the business
  • Alternative financing sources used before seeking SBA funding
  • Meeting the SBA’s size standards, based on average annual receipts or average number of employees (varies by industry)

You can use the SBA’s Lender Match Tool to find an approved SBA lender near you and start the application process.

Other SBA 7(a) loan programs

There are other SBA programs under the 7(a) umbrella that suit various small business financing needs.

7(a) Small Loan

The 7(a) small loan offers similar terms and use of proceeds as the 7(a) standard loan with a lower maximum loan amount.

  • Loan amounts: Up to $350,000
  • Terms: Generally similar to 7(a) loan
  • Eligibility: Generally similar to 7(a) loan
SBA Express

The SBA Express loan offers a quick turnaround — applicants can receive a response within 36 hours. Acceptable use of proceeds is the same as the 7(a) loan, including working capital and the purchase of equipment, fixtures and real estate.

  • Loan amounts: Up to $1 million (reverts to $350,000 on Oct.  1, 2021)
  • Terms: Up to 25 years; interest rates range from 7.75% to 9.75%, based on the prime rate
  • Eligibility: Made by the lender
Export Express

The Export Express loan offers fast funding — typically within 24 hours — for small exporters.

  • Loan amounts: Up to $500,000
  • Terms: Up to seven years (if used as a line of credit); interest rate caps at 9.75% for loans of $50,000 or less and 7.75% for loans over $50,000 (based on 3.25% prime rate)
  • Eligibility: Same as 7(a) loan, though business must be operational for at least 12 months
Export Working Capital

The Export Working Capital loan helps export companies through financing for working capital, suppliers, inventory and the production of export goods or services.

  • Loan amounts: Up to $5 million
  • Terms: Up to one year (if used as a line of credit); interest rate negotiated between lender and borrower with no SBA cap
  • Eligibility: Same as 7(a) loan, though business must be operational for at least 12 months
Community Advantage

The Community Advantage (CA) program provides financing to small businesses in underserved markets, such as low-income communities, veteran-owned businesses and rural areas.

  • Loan amounts: Up to $250,000
  • Terms: Up to 25 years; maximum interest rate of 9.25% (based on 3.25% prime rate)
  • Eligibility: Same as 7(a) loan
CAPLines

CAPLines are government lines of credit businesses use to finance seasonal or short-term working capital needs. There are four types of CAPLines — working capital, contract, seasonal and builders. CAPLines can be a revolving line of credit.

  • Loan amounts: Up to $5 million
  • Terms: Up to 10 years; variable rates range from 6% to 8%, fixed rates range from 8.25% to 11.25%
  • Eligibility: Same as 7(a) loan

Note that specific CAPLines may apply additional eligibility requirements — the builders line, for example, requires a track record of completing construction and/or renovation projects.

SBA 504 loan program

The SBA 504/CDC loan program partners with Certified Development Companies (CDCs) to provide long-term financing to purchase major fixed assets. A 504/CDC loan provides up to 50% funding from a commercial lender and up to 40% funding from the CDC office in your area; you will have to provide at least 10% as equity.

Uses
  • Purchase machinery and equipment
  • Purchase land or building
  • Construct, remodel or improve building
  • Purchase or install fixtures
Loan amounts

The range of the CDC portion in a single project is $5 million, increasing to $5.5 million for some manufacturers and energy-related projects.

Rates and terms

Repayment terms for the CDC portion of the loan range from 10 to 25 years, and interest rates are tied to the five- and 10-year Treasury rates. The third-party lender may offer a fixed or variable rate, with the maximum rate being the lesser of 9.25% (based on the prime rate) or the maximum interest rate permitted in a given state. Terms for third-party loans are negotiated between lender and borrower, though the SBA has required term length minimums depending on the CDC loan’s term.

How to apply

To qualify for a 504 loan, eligible businesses must:

  • Not exceed $15 million in tangible net worth
  • Not exceed $5 million in average net income
  • Meet job creation and retention requirements

The SBA’s Lender Match Tool can help you contact an SBA-approved CDC lender to begin the application process.

Microloans

The SBA microloan program provides direct loans to microloan intermediaries to provide financing to underserved markets, including women, low-income applicants and minorities.

Uses
  • Working capital
  • Machinery or equipment
  • Inventory and supplies
  • Furniture
  • Fixtures
Loan amounts

Microloan amounts can range up to $50,000. The average microloan amount was $14,434 in fiscal year 2020.

Rates and terms

Repayment terms can extend up to seven years. Rates typically range from 7% to 9% and are negotiated between the borrower and intermediary.

How to apply

Contact your local SBA district office to find an SBA-approved intermediary near you. Eligibility requirements may vary by each microlender.

Other SBA loan programs

Disaster loans

The SBA offers emergency loan resources for businesses affected by a declared federal disaster, an economic injury or an essential employee in the military reserve being called to active duty.

Economic Injury Disaster Loan (EIDL)

EIDLs provide funding to small businesses financially affected by a declared disaster. Small businesses struggling during the coronavirus pandemic may secure a loan of up to six months of working capital with a repayment term of 30 years and a maximum rate of 3.75%. You may apply for a COVID-19 EIDL through the SBA’s disaster loan assistance portal.

Physical damage loan

The SBA offers loan amounts of up to $2 million with a repayment term of up to 30 years and a maximum interest rate of 8%. These loans are available to businesses within a declared disaster area that have suffered physical damages. Submitting an online application is also done through the SBA’s disaster loan assistance portal. SBA inspectors will estimate the cost of physical damages when reviewing your application.

Mitigation assistance

Qualified applicants can increase their SBA disaster loan program amount up to 20% for disaster mitigation projects, such as installing fire-rated roofs and pressure-rated windows. Affected businesses may consult their local Disaster Recovery Center to see if they qualify.

Military reservist loan

If you temporarily lose a military reservist who is called away to active duty, you may be eligible for a Military Reservist Economic Injury Disaster Loan (MREIDL) of up to $2 million to cover necessary operating expenses. Repayment terms may extend up to 30 years with an interest rate of 4%. You may apply for an MREIDL through the disaster loan assistance portal.

PPP Loans

The CARES Act rolled out the Paycheck Protection Program, a new SBA loan program, to help small businesses cover payroll costs in response to the coronavirus pandemic. The SBA stopped accepting PPP loan applications on Aug. 8, 2020, but Congress renewed the program in December 2020.

How they work

PPP borrowers may also be eligible for the SBA loan forgiveness program if you use the funds on eligible expenses, such as payroll costs, rent and utilities. To apply for loan forgiveness, you must contact your PPP lender, complete the correct forms and supply necessary documents, including bank account statements and tax forms.

Veterans loans

The SBA Veterans Advantage 7(a) loan is no longer available. However, military veterans can still enjoy various perks, such as waived fees for SBA Express Loans and guaranty fee relief during the coronavirus pandemic. In addition, some SBA loan programs, like the Community Advantage program, specifically target veteran-owned businesses.

 

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