Frequently Asked Questions About SBA Loans
If you are looking to buy or expand a small business, you may consider obtaining an SBA loan. SBA loans are designed to help small businesses succeed. However, applying for an SBA loan is a complex process. This is especially true if SBA loans are a new concept to you. Listed below are answers to several common questions about SBA loans. These questions are important to answer for individuals who are looking to obtain an SBA loan.
We hope this information helps clarify any questions you have about SBA financing. If you have any additional questions about SBA loans, Peak Business Valuation is happy to help! Peak helps small businesses across the country connect with reputable SBA lenders. You can start by scheduling a free consultation with Peak Business Valuation, business appraiser!
What Can I Get an SBA Loan For?
SBA loans can be used to finance various business expenses. This includes purchasing equipment, purchasing real estate, and funding other start-up costs. Additionally, an SBA loan can help with the following:
- Debt Refinancing
- Working Capital
- Business Acquisition
- Business Expansion
- Franchise Financing
SBA loans are not to be used for personal use or other non-business activities.
What is the Difference Between SBA Loans and Traditional Bank Loans?
SBA loans tend to offer more flexibility than traditional bank loans. This is due to lower down payment requirements and longer repayment terms. SBA loans may also have lower credit score requirements than traditional bank loans. As such, SBA financing is ideal for small business owners who may not qualify for traditional bank loans.
Who is Eligible for an SBA Loan?
Eligibility requirements for SBA loans can vary depending on the program you are applying for. In general, your business must have fewer than 500 employees, a good business plan, and no delinquent debt obligations. Additionally, eligible borrowers typically have a good credit score. If you are unsure if you are eligible for an SBA loan, Peak Business Valuation can connect you with an SBA lender who can help. Schedule a free consultation today.
What are the Different Types of SBA Loans Available?
One of the most common questions about an SBA loan is what loans are available to me. There are several different types of SBA loan programs. This includes the Microloan Program, the Disaster Loan Program, the Export Express Program, and many others. The most common SBA loan programs are:
The SBA 7(a) Loan Program
- This SBA loan program may be used to finance working capital, equipment, debt, and other business purposes.
The SBA 504 Loan Program
- The SBA 504 Loan program is specifically for commercial real estate and equipment financing.
These loans also differ in the amount of money offered, interest rates, repayment terms, collateral, and eligibility requirements. To learn more, connect with a respected SBA lender. Peak Business Valuation, business appraiser, can help you do so! Schedule a free consultation with Peak Business Valuation today!
How Do I Apply for an SBA Loan?
Applying for an SBA loan can be a complicated process with many steps. Below is a general overview of the SBA loan application process.
- Determine Eligibility
- Choose an SBA Loan Program
- Find the Right Lender
- Gather Information and Documentation
- Complete Application Forms
- Submit Required Letters
To learn more about the steps to applying for an SBA loan take a look at The SBA Lending Process. However, it is best to consult with a reputable SBA lender if you have any questions. Peak Business Valuation is happy to connect you with an SBA lender! Schedule a free consultation today!
What Is The Average Term Of an SBA Loan?
The term of a loan varies depending on the purpose of the SBA loan. For example, the SBA 7(a) Loan typically has terms of up to 25 years. Whereas the SBA 504 Loan program may have terms of 10 or 20 years. As such, the average term for an SBA loan is between 10 – 25 years.
How Much Money Can I Borrow with an SBA Loan?
The amount of money that you can borrow varies depending on the SBA loan program. For example, SBA 7(a) loans can typically lend up to $5 million. In contrast, SBA Export Express loans have a limit of only $500,000. The amount of money you receive in an SBA loan also depends on factors such as your financial health.
What is the Interest Rate on an SBA Loan?
The interest rate on an SBA loan depends on the loan amount, maturity, and base interest rate. The guide below shares interest for SBA loans if maturity is less than 7 years:
- With a loan amount of $25,000 or less, the interest rate will be the base rate plus 4.25%.
- With a loan amount between $25,000 and $50,000, the interest rate will be the base rate plus 3.25%.
- With a loan amount of $50,000 or more, the interest rate will be the base rate plus 2.75%.
The base rate will be determined by the SBA. If maturity is more than 7 years, the interest rates increase by 0.50%. To find out what the interest rate of your SBA loan will be, it is important to work with a reputable SBA lender. To get more answers to questions about SBA loans, schedule a free consultation with Peak Business Valuation, business appraiser.
How Long Does it Take to Get Approved for an SBA Loan?
Once you have completed your SBA loan application, the approval process typically takes 30 to 90 days. This time frame can change depending on the SBA lender and the loan program you are applying for.
How Does a Lender Evaluate Creditworthiness?
Having sufficient creditworthiness is vital when applying for an SBA loan. The SBA evaluates creditworthiness by assessing the business owner’s personal credit reports as well as the credit reports of the small business. This information helps the SBA ensure that you are reliable and able to repay the SBA loan. To know if you have sufficient creditworthiness, it is best to work with an SBA lender. Peak Business Valuation is happy to connect you with a quality SBA lender who services your business industry. Schedule a consultation today!
Can I Get an SBA Loan if I Have Bad Credit?
It is ideal to have good credit if you are looking to apply for an SBA loan. However, the SBA has not set any specific guidelines for credit scores. As such, even small businesses with bad credit may be able to obtain an SBA loan. If you have bad credit, Peak Business Valuation may connect you with an SBA lender who can help!
Work With Us!
Obtaining an SBA loan can help you succeed as a small business owner. If you are seeking to obtain an SBA loan, Peak Business Valuation is happy to help! Peak Business Valuation works with over 80 SBA lenders across the country. We can provide extensive guidance on who to work with when applying for an SBA loan. In addition, we are happy to connect you with a reputable SBA lender that can meet your small business needs. We are also happy to answer your questions about SBA loans. Start today by scheduling a free consultation with Peak Business Valuation, business appraiser!
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