What are the Benefits of SBA Financing?

• Longer maturities help improve cash flow

• Lower equity requirements than conventional financing

• Use projections when calculating cash flow requirements

• Finance the “total project” including closing costs and fees in addition to reasonable amounts of working capital

• Ability to receive loans for exporters

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What are the types SBA Financing?

SBA 7(a)

• Projects up to $5 million

• Fully amortizing government guaranteed loan for general purposes

• 25 year term for real estate purchases

• 10 year term for all other loans

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SBA 504

• Projects up to $25 million

• 20 year term for owner-occupied real estate acquisition, construction or refinance

• 10 year term for heavy equipment

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Who can qualify?

97% of All US Owned Business Qualify for the SBA Loan Program​

• Must have qualifications

  • SBA Size standards

    • The maximum tangible net worth of the applicant and it’s affiliates is not more than $15 million and;

    • The average net income after Federal income tax (excluding any carry-over losses) of the applicant and it’s affiliates for the 2 full fiscal years before the date of the application is not more than $5 million.

  • Be a for-profit business (no non-profits)

  • The business is physically located and operates in the United States and its territories

  • Owner is a U.S. Citizen or legal permanent resident

  • Active owner involvement

• Although not required additional criteria may help you qualify for a loan more quickly:​

  • ​Business demonstrates historical debt service (1.25x) to support business debts (or solid projections for start-ups)

  • Guarantors have direct industry experience or strong skills that are transferable to the business.

  • Guarantors have good credit and show adequate post-closing liquidity.

  • Loan must be to finance SBA eligible business & have SBA eligible project costs.

  • For the purchase of real estate, the business can immediately occupy: 51% if an existing building and 60% if ground up construction.

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Why SBA vs Conventional loans?

• ​Business acquisition

• Partner buyout

• Existing business expanding into a different industry

• Borrower wants a longer term

• Borrower wants to include FF&E and soft costs (interim interest, contingency, operating capital, closing costs & fees) in the financing package

• Borrower would like to maintain some of the company’s liquidity and would prefer a lower cash injection than required on a conventional loan.

• Start-up business or someone working for another company and then “going out on their own”. Start-up business loans can be difficult to get approved.

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Should I pay a broker fee for an SBA loan?

No.  Brokers are paid by the lending partners.  These fees are disclosed on the SBA Form 159.  Brokers are not allowed to receive fee payments from both the borrower and lending partner.  Any broker that is requesting a fee from you in return for placing the loan is going against SBA regulation.