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SBA Loans

The Small Business Administration is a United States Government organization tasked with facilitating loans and credit to small businesses, which in turn provide around 50% of the jobs in the United States.  There are 5 loan types available under the SBA Banner: 1) 7(a) loans (the most popular); 2) Microloans; 3) Real Estate and Equipment loans; 4) Disaster Recovery; and 5) Export loans.

 

Generally speaking, SBA Loans carry a lower interest rate than third party loans or loan products, and will offer a longer term for repayment.  Rates generally sit around 2.75% to 3.75% over prime, which is set by the Federal Reserve.  Loans above $151,000 will also carry an SBA guarantee fee of 2.25%.

 

The lower interest rates and longer repayment terms are, generally speaking, offered because the US government guarantees repayment of ca. 90% of the loan amount to the banks that issue the loans; if the loans don’t get repaid the banks don’t shoulder the entire burden, so the calculus that enters into the risk absorption by the bank or lending institution is different than a third party product.  But, in turn, they’re also harder to get and take a little more time to issue – where you can get a cash advance or short term business loan in some cases in a matter of hours, SBA loans can take a couple of days to a week for the smaller loans, and up to 3 - 4 weeks for the larger. 

 

 

navigate_nextAPPLY FOR AN SBA LOAN