WHAT IS AN SBA LOAN?
An SBA loan is small business loan guaranteed by the Small Business Administration. It’s issued only by participating lenders. Most of these lenders are banks.
HOW MUCH CAN I BORROW?
The SBA can guarantee up to 85% of small business loans equal to or less than $150,000. They guarantee 75% of loans greater than $150,000. SBA says the average loan amount was approximately $375,000 in 2016. The program’s maximum loan amount is $5 million.
HOW LONG IS THE REPAYMENT TERM?
According to the SBA, the loan term is determined on how you plan to use the funds:
• Working capital or daily operations: Loan terms are seven years
• New equipment purchases: 10 years
• Real estate purchases: up to 25 years
Determining the usage can be an advantageous strategy for the business owner. A longer term means a lower interest rate and lower regular payments. This then leaves more money to allocate towards other business expenses allowing more flexibility and continued growth.
IS THERE AN SBA LOAN FOR VETERANS?
Now you know there is no such thing as a VA business loan, you’re wondering if there is anything that may help veterans. There actually is a loan tailored to helping veterans. SBA has implemented a program specifically to assist veterans. The main benefit of the program is that it sets the upfront fee to zero for all veteran loans authorized under the SBA Express program up to $350,000. It’s an amazing program and one you should certainly consult an SBA Loan Specialist for if you are veteran interested in obtaining an SBA loan.