SBA Small business loans FAQs

What are the advantageous of getting an SBA loan?

SBA loans are designed to provide loans to those who may not otherwise quality for a traditional commercial loan. Banks are willing to take more risks under the SBA loan program since the federal government will guarantee up to 85% of the loan.

Key advantageous of SBA loans versus traditional commercial small business loans:

  • Longer loan maturities (10 years for non-real estate and 25 years for real estate)
  • More flexible loan covenants
  • Less restrictive collateral requirements
  • Lower down payments – 100% financing possible


What are the disadvantageous of getting an SBA loan?

Key disadvantageous of SBA loans versus traditional commercial small business loans:


What is a SBA lender?

An SBA lender is a bank or financial institution improved to provide SBA loans through the SBA’s various loan programs. Note that the bank does make the loan and has its own underwriting standards.


What banks do small business loans?

Virtually all banks do small business loans. To get a good proxy for which banks are currently providing the lowest cost loans, see our lowest cost SBA small business loans post, which is updated quarterly based on actually loan activity. Also, we rank all SBA lenders by loan volume so that information as well as our regional and local SBA banks listing provide you with a great source from which to start. We recommend starting with banks that meet the following criteria – 1) competitive rates 2) geographically close to you and 3) understand your industry.


What is the SBA Express loan program?

The SBA Express loan program is for loans up to $350,000. As its name indicates, turnaround time for loan approvale are streamlined under this program. In additions, borrows can utilizes the loan as a line of credit (note: typical SBA loans amortize with monthly interest and principal payments).


How long does it take to get a small business loan?

An SBA loan can be processed in as little as 30 days for a smaller Express loan or as long as three to four months depending on the bank, the borrower, and the speed at which documents are exchanged.

What are the advantages of using an SBA preferred lender?

SBA preferred lenders have received special designation that allows them to make lending decisions locally (as opposed to submitting all paperwork to the SBA for their approval), thereby spending up the approval process. The vast majority of banks that offer SBA loans are SBA preferred lenders.


How many years is an SBA loan or small business loan?

SBA loans for real estate can be up to 25 years. Non-real estate loans can be up to 10 years. All SBA loans (other than SBA Express loans) require monthly principal and interest payments (“debt service” payments). SBA Express loans can be utilized as a line of credit but the maximum Express loan is $350,000. Traditional commercial and industrial loans that are not SBA loans are typically 5 year loans.


What is the interest rate on a small business loan?

Rates for loans vary daily based on a variety of factors. On we report quarterly loan activity for the top 1,000 most active SBA lenders, including lowest cost small business lenders, maximum rates an SBA lender can charge, and current historical interest rates charged by each small business lender.


How much down payment is required for a small business loan?

Depends on the bank and your loan application, but in general banks like to see a down payment of 20% or more. SBA loans, however, allow up to 100% financing depending on bank underwriting standards.


How do you buy a business with no money?

SBA loans offer up to 100% financing. You will still have to personally guarantee any loan even if you have little or no assets if you will own 20% or more of the business post acquisition.


What is seller financing for a business?

Seller financing is where a seller of a business allows the buyer to purchase a percentage of the business with cash and then “finance” the rest a promissory note (aka loan) or other form of consideration (e.g., deferred payments, consulting agreement, etc). For example, if a business was being sold for $100,000 and the buyer put up $80,000 in cash at closing and then paid the seller $20,000 over a two-year note, the $20,000 would be considered seller financing. Note that the SBA does not allow seller financing for SBA loans, but traditional commercial loans do allow for seller financing.


Did we not answer you question(s) with our FAQs?

Please contact us and we will answer any questions you have regarding the process of getting an SBA small business loan for your business.

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