Understanding SBA Loan Programs
SBA loans are business financing products partially backed by the U.S. Small Business Administration. Because the government guarantees a significant portion of the loan, participating lenders can offer rates and repayment terms that are simply not available through conventional financing channels. For established businesses with a solid track record, SBA programs typically represent the lowest cost of capital available outside of a traditional bank relationship. We work with Preferred Lender Program approved lenders, which means the approval process is streamlined through delegated authority rather than requiring full SBA review on every file.
There are two primary programs we work with. The SBA 7(a) Small Loan covers amounts up to $350,000 with terms up to 10 years and a minimum credit score of 700. The SBA 7(a) Standard Loan covers amounts up to $5,000,000 with terms up to 25 years and a minimum credit score of 650. Both programs require a minimum debt service coverage ratio of 1.25 and at least 2 years of operating history. The business must be organized for profit, based in the United States, and current on all government-related obligations. SBA programs take longer than alternative financing products and require more documentation. They are the right product for businesses that qualify and have the runway to go through the process properly.
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Do You Qualify?
These are the minimum thresholds. Businesses with stronger revenue, longer operating history, higher credit scores, and clean tax returns qualify for larger amounts and more favorable terms. Your advisor will assess your profile before recommending whether an SBA program is the right path for your situation.
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