SBA Loans for Startups

SBA Loans for Startups

Many startup companies rely solely on capital. The reason is, many individuals feel capital is the only way startups grow and expand. Over the course of three years, I witnessed hundreds of startup companies turn to venture capital and venture debt for capital. In my humble opinion, not every startup is meant for venture capital. There may be better ways to seek out capital if you are an entrepreneur with a dream. For instance, if you operate a startup, the SBA loan program is available to you. There are several SBA loans for startups to consider before pursuing venture capital.

Peak Business Valuation works with SBA lenders across the country providing SBA business valuations. We are happy to answer any questions you have about SBA loans and the value of your business. Peak is also happy to connect you with an SBA lender who services your business’s industry. Get started by scheduling a free consultation.

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Advantages of SBA Loans 

Established businesses frequently use SBA loans. However, there are specific advantages for startups that are worth considering. For example, the SBA guarantees 80.0% of an SBA loan for banks if the borrower defaults on payments. This guarantee, as part of the SBA program, incentivizes banks to consider funding businesses that are inherently riskier. This risk may be due to the lack of collateral, lack of established operating history, etc… For more information, see Advantages of SBA Loans. 

SBA Loans for Startups

The SBA offers an array of loans for startups, each with its own strengths to meet your startup’s needs. Consider each of these options before pursuing venture capital or debt.

SBA 7(a) Loan

The SBA 7(a) loan is one of the most versatile loans available. Individuals use it to fund startups, equipment and machinery purchases, partnership buy-outs, business acquisitions, etc… The maximum loan amount for the 7(a) loan is $5 million. Peak Business Valuation, business appraiser, provides hundreds of SBA business valuations for SBA 7(a) lenders across the country. We are happy to answer questions about getting an SBA business valuation.

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SBA 504 Loan

Next, the SBA 504 loan program provides an opportunity to buy or build owner-occupied commercial real estate. The bank funds a portion of the loan. And a Community Development Corporation (CDC) funds the other or another a portion, along with a down payment from the borrower. Maximum loan amounts range from $5.0 million to $5.5 million. This depends on the type of business or project.

SBA CAPLine Loan

An SBA CAPLine loan can meet your short-term cash flow and working capital needs. This loan allows you to transition between busy and slow seasons of cash flow. An individual best uses an SBA CAPLine as a revolving line of credit to make recurring payments or to prepare for unexpected expenses. The maximum CAPLine loan amount is $5 million. Typically, the SBA CAPLine is offered in conjunction with SBA 7(a) loans and SBA 504 loans. However, a lender can issue an SBA CAPLine as a standalone product.

SBA Express Loan

An SBA Express loan excludes excess paperwork with a streamlined approval process for an easy-to-use line of credit or a term loan. The SBA Express loan can put as much as $350,000 in your hands within a 36-hour period.

SBA Veterans Advantages Loan

Last, the SBA Veterans Advantage loan is available to businesses that are at least 51%+ owned by veterans or military spouses. These loans offer the same terms as SBA 7(a) loans and SBA Express loans, but with reduced fees.

Summary

Startups have several financing options available to them. Remember to do your research so you can find the most beneficial financing for your business’s needs.

Peak Business Valuation helps individuals across the country who are buying or selling a business. Obtaining a business valuation can help you feel confident in your business transaction. A business appraisal determines the fair market value and identifies opportunities to maximize it. If you plan on using SBA financing, often the lender will order an SBA business valuation. Peak Business Valuation, business appraiser, is happy to provide the SBA business valuation for your chosen lender.  If you need assistance selecting an SBA lender, feel free to reach out. We are always happy to assist. Schedule a free consultation using the link below!

 

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