SBA – Small Business Administration
What is an SBA?
An SBA is a loan which is 75% backed by the government and 25% backed by the lending institution that services the loan. It is a standard simple interest, monthly payment and the rates are the lowest you will find when it comes to business loans.
Typically the rates are in the low 6% range, the rates are derived from Prime Rate + a margin.
How does it work?
Processing an SBA loan is similar to standard term loans. They require a bit more documentation than typical investor or standard term loans but they look at the same data for qualification purposes. SBA loans have changed drastically in that you can expedite them in a matter of a couple weeks when the loan amount is under $400,000.
If you have been to your bank for a larger business loan the chances are very good that they offered you an SBA.
How long does it take?
Once all documents are submitted you can have a full approval within 10 business days when the loan amount is under $400,000.
Loans over $400,000 require 60 days and for more complex transactions the process could take 90 days.
Who does this make sense for?
This is a great loan for any business that has solid profits and wants to take advantage of lower rates while spreading the term out over 10 – 25 years to keep the monthly payment as low as possible.
How do I know if I qualify?
We need to review 3 years of financials, the SBA looks for a higher level of profitability than term loans or investor term loans. If the numbers are right, an SBA is a great option for any business.
Note: Most business debt can be paid off using all 3 of these lending options.