SBA Loans: Types, Rates & Requirements

Minimum Requirements

680+ Credit score
10-20% Down payment
Some collateral (loan doesn’t have to be fully collateralized)

1.

Basic 7(a) SBA Loans / SBA Advantage Loan

SBA 7(a) loans are the most common types of loans with a loan amount up to $5,000,000. SBA 7 (a) loans can be used for many business purposes including working capital, debt refinancing business acquisition, marketing, commercial real estate purchase, new construction, leasehold improvements, franchise purchases, and equipment purchases. The SBA 7(a) program includes the SBA Advantage Loans and SBA Express Loans.

The interest rate on SBA 7(a) loans can vary from 6 – 8% with repayment terms up to 10 years for working capital loans and 25 years for commercial real estate loans.

2.

CDC / SBA 504 Loans

A Certified Development Company (CDC) is a nonprofit corporation which works with the SBA and combines a loan from a bank with a lower interest rate and longer repayment terms with loan amount up to $20,000,000. SBA 504 Loans can be used for many business purposes including the purchase of owner-occupied commercial real estate, heavy equipment purchases, commercial real estate improvements, new construction, modernization and the conversion of existing facilities.

The interest rate on CDC/504 loans can vary from 3.78 – 5.39% with repayment terms up to 10 – 20 years. With a fixed rate, it is easier for the borrower to repay the loan.

Minimum Requirements

660+ Credit score
Initial 10% Down payment of the project cost
Real estate possession must be at least 51%
Tangible net worth less than $15 million
Average net income less than $5 million after taxes
Not engaged in speculation or investment in rental real estate
Don’t have other sources of funds
Can repay loan on time from the projected operating business cash flow

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Minimum Requirements

A credit score of 660+
No defaults, foreclosures, or tax liens
Provide collateral in the form of invoices, inventory, or contracts
Owner’s personal guarantee of at least 20%
Additional collateral
1 year in business with seasonal cash flow for seasonal credit line

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3.

SBA CAPLines Program

SBA CAPLines of credit are used for short-term and seasonal working capital small business needs. The five types of SBA CAPLines are as follows:

Seasonal Line of Credit: This credit line works as advances against your expected accounts receivable and inventory when there are seasonal fluctuations in sales.
Contract Line of Credit: Contract line of credit is used to finance materials costs and labor related to assignable contracts.
Builders Line of Credit: This line of credit is usually for contractors or builders to finance project material costs and direct labor associated with building and/or renovating residential or commercial buildings and even for land related to a project.
Standard Asset-Based Line of Credit: If a small business is unable to meet credit standards related to a long-term credit, Standard Asset-Based Line of Credit provides funding for periodic growth, and/or short-term needs.
Small Asset-Based Line of Credit: Small Asset-Based Line of Credit works similar to a Standard Asset-Based Credit Line up to $200,000. SBA can waive the sticker servicing requirement, if a business can demonstrate full amount repayment ability from the cash flow.

4.

SBA Export Loans

SBA Export loans are intended to help small business exporters to expand their export activities. These loan programs allow small businesses to offer flexible sba loan terms to their international customers. There are three main types of SBA Export Loans:

SBA Export Express Loan: SBA Export Express Loan program is the simple loan product which offers streamlined working capital up to $500,000 with sba loan terms up to 7 years.
SBA Export Working Capital Loan: With this SBA loan program, an exporter can fund export transactions from purchase orders to collections with working capital loans up to $5 million and terms from 12 months to 3 years.
SBA International Trade Loan Program: This SBA loan program provides funding up to $5 million in working capital for fixed assets for businesses that export or for businesses negatively impacted by imports with terms up to 25 years.

This program offers loan financing for fixed assets and working capital to businesses that plan to start or continue exporting, or that have been adversely affected by competition from imports.

Minimum Requirements

660+ Credit score
Business must be involved in exporting goods or services to foreign countries
For the Express Export loan, the business must be at least 1 year old

The sba loan interest rates are as follows:

SBA Export Working Capital Loan: No limit
SBA Export Express Loan: 8 - 10%
International Trade Loan: 5.75 - 8.25%

The repayment terms are as
follows:

SBA Export Working Capital Loan: Up to 7 years
SBA Export Express Loan: Up to 3 years
International Trade Loan: Up to 25 years

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Minimum Requirements

640+ Credit score
Typically need to have some collateral
Non-profit childcare centers are eligible in some cases
Personal guarantee

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5.

SBA Microloan Program

SBA Microloans program are designed to help small businesses and certain nonprofit community-based organizations to start and expand with loans up to $50,000 and terms up to 6 years. Microloans have higher interest rate of 8% -13% as compared to other SBA loans and these loans cannot be used to refinance debt or purchase property. Microloan can be used for business startups, expansions, materials and supplies, furniture purchases, marketing, inventory purchases, labor and much more.

The interest rate on SBA Microloans can vary from 8% – 13% with repayment terms up to 6 years.

6.

SBA Disaster Loans

If you’re a small business owner and located in a declared disaster zone and have incurred economic losses or property damage because of a disaster, you may be eligible for SBA Disaster loan with cash up to $2 million. There are 3 types of disaster loans:

Home Disaster Loans: Short- to medium-term working capital loans to help businesses that lose an essential employee due to being called-up for active military service meet normal operating expenses.
SBA Business Physical Disaster Loans (BPDLs): These types of loans are available to homeowners or renters to overhaul or change damaged real estate or personal property.
SBA Economic Injury Disaster Loans (EIDLs): These types of loans are available for small agricultural cooperatives and most private, non-profit organizations of all sizes. SBA Economic Injury Disaster Loans are working capital loans to help small businesses that have endured economic injuries and are unable to meet operating expenses. A small business doesn’t need to be a for-profit business in order to be eligible for such loans.

SBA Disaster loans can be used for working capital, to repair or replace damaged property, operating expenses, real estate purchases, machinery & equipment purchase, furniture purchase, inventory purchase, materials purchase and leasehold improvements.

The interest rate on SBA Disaster loans can vary from 4% – 8% with repayment terms up to 30 years.