SBA Loans to Grow Your Business Affordably
The U.S. Small Business Administration (SBA) is a federal agency that supports small business development and growth.
What is an SBA loan?
Small business loans backed by the SBA are the smartest and most affordable way to finance a small business with flexible terms and low-interest rates that are accessible to American business owners and entrepreneurs who have well-established businesses with strong credit history. An SBA loan is a form of conventional financing that has very stringent requirements, are partially guaranteed by the U.S. Small Business Administration(SBA), and are issued by authorized SBA lenders such as banks, credit unions, and private lenders.
With these government-backed loan programs, the Small Business Administration is helping entrepreneurs, veterans, women, and minorities get easy access to lending opportunities by offering banks and private lenders a partial repayment in case the businesses default on their payments. Therefore, reducing the risk for lenders translates into flexible terms, low annual percentage rates (APR), low-interest, and low down payments for borrowers.
It is important to remember that the SBA doesn’t lend money directly to small business owners, instead, it sets guidelines for loans made by its partnering lenders.
Apply for an SBA loan with GoKapital, an authorized SBA lender!
Types of SBA loans
There are different types of SBA loans for business owners. Deciding which one is right for you will depend on the goals and needs of your business, its size, and the time in operation.
Summary of loan types
SBA 7a Loan The SBA’s 7(a) is the most popular loan program. Business owners love it for its long terms and flexibility, and because you can use it to alleviate most of the business necessities—making the loans more manageable for borrowers.
The Small Business Administration 7(a) loan could be used to purchase or lease equipment and machinery, inject working capital, refinance existing debt, purchase an existing business, purchase furniture, construction & remodeling, acquiring real estate, fulfill seasonal inventory demands, and much more.
- For general business purposes
- Great for Businesses that need working capital
- Up to $5,000,000 s
- Long repayment terms (3-25 years)
- Low-interest rates
- The most affordable way to obtain financing for your business
SBA 7(a) Loan Requirements
- Credit Score (FICO): Above 680
- Collateral might be required by lenders if the loans are above $25,000
- No recent bankruptcies, tax liens, or foreclosures
- The business must be physically located in the United States
The CDC/504 Loan Program The Certified Development Company (CDC) loan was designed for businesses that wish to purchase equipment or commercial real estate. It requires a low down payment and provides fixed interest rates with long repayment periods. Loans are usually used for expansion and business growth.
504 Loan Features
- Loan Amounts: Up to $10,000,000
- Terms: 10-20 years
- Funding time: 30-60 days
504 Loan Requirements
- Business must have a net worth of less than $15 Million
- Business must have an average net income less than $5 million after taxes for the preceding two years.
The only two loan programs that are available through GoKapital are the 7(a) and the 504. For more information on the other SBA program, visit the SBA’s website by clicking the links below.
If you’re not sure which loan program is right for you, GoKapital can help. Talk to one of our specialists, and he or she will evaluate your business’ needs, explain the pros and cons of each program, and help you decide which program is right for you. And if your business is still not yet eligible for SBA funding, we will be honored to work together until we secure the much-needed financing.
Are you ready to start your application? Start here!
How can I get an SBA-guaranteed loan?
Gokapital has streamlined the application process for all kinds of funding. Loans secured by the SBA, however, have a higher threshold for approval than other types of funding. You must be in business for at least two years and be a U.S. citizen or legal permanent resident. Not every kind of business is eligible; check the SBA’s requirement list before you apply. You must have no bankruptcies in the last three years and no defaults on government-backed loans. Most importantly, your financial statements must show that your cash flow will support the loan’s repayment.
How can I use the funds?
You can use the proceeds of an SBA loan for short- or long-term working capital, including seasonal financing, construction financing, and inventory. You can also use it to buy equipment or real estate or to renovate existing real estate.
Min. Credit Score: 680+
Min. Time in Business: 2 Years
Min. Annual Revenue: $500,000
Profitability on Tax Returns: 15%-30%
Credit History: No recent bankruptcies, charge-offs or settlements
Overdrafts and Negative Days: Less than 5 per year
- Longest terms and lowest rates available
- Monthly repayment structure
- Loans up to $10 million
- Low-interest rate
- Very Favorable Terms
- Long Process – 2-3 months
- Perfect Credit & Financial History Required
- Must have collateral available
- Minimum 2 Years in Business Required
- No recent bankruptcies or liens permitted
- Certain Industries Not Eligible
Why Choose an SBA-Guaranteed Loan over Other Loans?
Backed by the US government, these loans offer flexible down payment options, low-interest rates, and longer repayment terms for small businesses compared to other financing options.
In order to expedite the process, you should have certain documents ready before applying for a loan.
Here’s just some of what you’ll need to apply for a small business administration loan:
- Signed GoKapital Loan Application
- Completed Personal Financial Statement
- 12 months of business bank statements
- 2 Years of Business Tax Returns
- 2 Years of Personal Tax Returns
- Year-to-date Financial Statements
- Profit & Loss Statement
- Balance Sheet
- Copy of Recent Credit Score