To fully understand SBA lending it often helps to think of a bank first having a regular business loan program and then layering a handful of SBA restrictions on top of their regular business loan restrictions in exchange for loan loss guarantees so that the bank can offer loans to more borrowers.   Because of this structure much of what is often passed off as “SBA guidelines” are in fact the individual bank’s guidelines as such just because a borrower has been denied by 1 SBA lender by no means is their request ineligible for an SBA loan.

While it helps one understand the SBA business loan product in reality an SBA loan can be so profitable to a bank that they often won’t offer a similar loan without the SBA guarantee.   Today a majority of traditional bank loans are SBA loans but of course where there are exceptions your banker or Business Loan Partners can identify those opportunities.

Therefore what is the SBA loan program?

SBA Loan Program
The SBA Loan Program can be an excellent source of financing for most businesses.  A sample of the type she of loans that are eligible for SBA financing include:
COMMERCIAL/INDUSTRIAL REAL-ESTATE FINANCING  Purchase, Build, Refinance, or Renovate:

• Owner-occupied properties
• Single-purpose buildings
• Gas stations
• Restaurants
• Repair Shops
• Auto Dealerships
• Hotels and motels
• Convalescent hospitals
• Veterinary

EQUIPMENT FINANCING

• Commercial printing and binding
• Machine tools
• Manufacturing Equipment
• Heavy Equipment
• Trucking
• Medical Equipment
• Laundry/dry cleaning
• Diagnostic Equipment

Underwriting varies by lender but is primarily a function of your company’s cash flow & collateral. Loan characteristics include:
Up to 25-year term
Up to 90% financing
Loans fully amortized, no balloons
Competitive rates and flexible terms
Fixed and variable rate options on both 7a and 504 programs

7(a) Loan Program
7(a) loans are the most common type of SBA loan. These loans offer long-term permanent financing to small businesses.

Eligible Businesses and Property Types – Almost any type of for-profit business is eligible for financing. Commercial real-estate must be partially occupied by borrower and includes, but is not limited to, the following types of properties:

• Office Buildings
• Warehouses
• Industrial Manufacturing
• Child Care Facilities
• Car Wash Facilities
• Automotive Repair
• Shops
• Professional Buildings
• Hotels and Motels
• Restaurants
• Gas Stations
• Bed and Breakfasts
• Franchises
• Start-ups
• Single-Use Buildings

Eligibility based on SBA size standards. Typically, retail businesses with annual sales of less than $6,000,000, manufacturing business with less than 500 employees, and service businesses with less than 100 employees. Eligible businesses include those in retail, manufacturing, and services industries.

Use of Proceeds

• Real-estate acquisition, construction, or refinance – up to 90% financing available
• Business Acquisition – up to 90% financing available
• Equipment Acquisition – up to 100% financing available
• Debt Refinance – up to 100% financing available

Terms

Up to 25 years for real-estate financing
Up to 10 years for equipment or business acquisition financing
Up to 7 years for permanent working capital All loans are fully amortized.

Interest Rates and Fees – Interest rates are always market competitive. Fees are generally limited to the SBA guaranty fee and customary closing costs.

Loan Amounts – Loan amounts range from $200,000 to $5,000,000

504 Loan Program
These loans offer long-term permanent financing for Real Estate and Equipment in the form of a 2nd lien loan which is accompanied by a non-SBA bank 1st position loan.

Use of Proceeds Real – estate acquisition, construction, or refinance – up to 90% financing available

Equipment Acquisition – up to 80% financing available

Loan Structures – Financing available on projects up to $12,000,000.

A lender typically provides a first mortgage of up to 50% of the total loan-to-value. This loan can range from $100,000 to $3,000,000.
The SBA, through a Community Development Company (CDC) provides up to 40% loan-to-value in a second lien position. This loan can range from $100,000 to $5,000,000.

Terms and Interest Rates First Mortgage – up to 25-year term for real-estate loan and up to 15-year term for equipment purchase with fixed and variable interest rates available.

Second Mortgage – up to 20-year term for real-estate and up to 15-year term for equipment purchase. Fixed rate is determined at SBA guaranteed 504 debenture sale.

Fees First Mortgage – fees are always market competitive.

Second Mortgage – 2.75% + legal review fee. This fee is financed in the loan. Fees also include customary closing costs, construction loan fees (if applicable), and bridge fees.

Eligible Properties
Almost any type of for-profit business is eligible for financing. Commercial real-estate must be partially occupied by the borrower.

Finally whether it’s a 7(a) or 504 loan the underwriting process can vary considerably whether the lender has achieved SBA Preferred Lender status from the SBA. An SBA Preferred Lender has delegated underwriting authority which simply means the lender conducts its own review of that the SBA guidelines were meet. This can save 30 days or more in the decision making process.

How does Business Loan Partners improve the process?

Business Loan Partners will pre-qualify your request for an SBA loan then if you choose we can find the lender(s) most likely to fund your loan. If you are strong borrower with a strong business that many lenders will compete to earn your business then our involvement is centered emphasis finding the best rates and terms. Additionally we can act as a loan packager which essentially means we work on your behalf to collect documents and present them to the lender in a positive light which can improve the odds of approval. For instance in business financing the borrower may need to supply cash flow and other financial projections, business plans, and more. These are a sampling of the many services Business Loan Partners provides.

If you choose to have Business Loan Partners involved in our most comprehensive service where we find a lender who will approve you plus package & prepare loan documents we have the following fee schedule based on size of the loan request:

Under $225,000 –                 Full Service Unavailable

$225,000 to $400,000 –        $5,000 fee due* when your loan closes

$400,000 to $750,000 –        $6,500 fee due* when your loan closes

$750,000 to $1,000,000 –     $8,000 fee due* when your loan closes

$1,000,000+                           $10,000 fee due* when your loan closes

* Depending on the loan request and initial credit review conducted by Business Loan Partners we may request a deposit up to $500.  That deposit, if necessary, will be disclosed to you upfront before presenting your request to our lending partners.