A Business loan made by an SBA Direct Preferred Bank with a portion of the loan guaranteed by the U.S. Government.
Benefits of an SBA Loan:
- Longer Maturities - Up to 25 years for Real Estate
- Lower Equity Requirements as low as 10% down for purchase of Real Estate
- Lower Debt Service Coverage Requirements
- Less Restrictive Collateral Parameters
Typical Qualifying Guidelines:
- Company in Business for at Least One Year
- Debt Service Coverage of at least 1.25x for the Last Fiscal Year
- Management Capability
- Good Personal Credit on anyone owning more than 20% of the Company
- Size of borrower varies depending on Industry, generally revenues of $5 million or less for Retail and 500 employees or less for Manufacturing
- Loan Size $100,000 to $2 million for Non-Real Estate purposes and up to $4 million for Real Estate
Two Programs are offered by the SBA including:
- 7(a): Real Estate and/or General Purpose Needs
- 504: Real Estate
What kinds of loans will the SBA Guarantee?
- Purchase of Owner Occupied Real Estate
- Construction and Expansion of Business Premises
- Purchase of Machinery and Equipment, Furniture and Fixtures, and Leasehold Improvements
- Business Acquisition
- Debt Refinancing
- Working Capital
Purchase of Existing Real Estate:
- New Construction 7(a) and 504: Owner must occupy 60% usable space immediately and may lease up to 20% long term. Reasonable growth projections must support borrower's plan to begin occupying the remaining space within 3 years and must occupy the remaining space within 10 years.
- Existing Building: Owner must occupy 51% of usable space. Circumstances of the business and/or real estate conditions may justify a grace period of up to 1 year to meet occupancy requirements.
- 7(a): Minimum Cash Injection of 10%. May be able to use other collateral (i.e. equipment) in lieu of cash injection.
- 504: Minimum Cash Injection of 10%. An additional 5% is required if the applicant is a start up business or the property is considered Single or Limited Use.
Competitive Variable and Fixed Rates Available.