The Small Business Administration (SBA) offers a variety of loan programs designed to help small businesses access the financing they need to start, grow, and succeed. Here’s a summary of the main loan programs offered by the SBA:
- 7(a) Loan Program: This is the SBA’s flagship loan program and offers a wide range of financing options for small businesses. 7(a) loans can be used for a variety of purposes, including starting a business, buying an existing business, expanding or improving a business, or refinancing existing debt.
- 504 Loan Program: The 504 Loan Program is designed to help small businesses secure long-term, fixed-rate financing for major fixed assets, such as real estate and equipment. These loans are typically structured as a partnership between a lender, a certified development company (CDC), and the SBA, with the SBA providing a portion of the financing.
- Microloan Program: The Microloan Program provides small, short-term loans to small businesses and nonprofit organizations. These loans are typically for amounts up to $50,000 and are used to finance the start-up or expansion of a business, purchase inventory or equipment, or provide working capital.
- Disaster Loans: The SBA Disaster Loan Program provides financial assistance to small businesses and homeowners who have suffered economic losses as a result of a declared disaster. These loans can be used to repair or replace damaged property, as well as to provide working capital to help businesses recover from the disaster.
- Community Advantage Loans: The Community Advantage Loan Program is designed to help underserved and underrepresented small businesses access financing. These loans are typically for amounts up to $250,000 and can be used for a variety of purposes, including starting or expanding a business, purchasing equipment or inventory, or refinancing existing debt.
Overall, the SBA offers a range of loan programs to help small businesses access the financing they need to start, grow, and succeed. By providing financing options that may not be available through traditional lenders, the SBA helps small businesses overcome barriers to growth and succeed in today’s competitive marketplace.
The SBA loan programs are very popular for business acquisition loans because:
- Loan Term: 10 years or 25 years.
- Collateral: No collateral is needed.
- Loan Size: An SBA loan of 5x cash flow is possible.
- Down Payment: Buyers can put as little as 10% into the transaction.