The SBA loan involves an application that is complicated and Lengthy but all types of businesses old and new are eligible to apply for SBA loan. There is a good chance of approval if you have a good credit score. This type of loan is very suitable for a startup company.
The qualifications for SBA loan primarily depend on your personal credit score as the business owner is involved to own and manage the business. Therefore, it is necessary to have a very strong credit history and very good credit score.
The applicants for SBA loan must be willing and prepared to come up with all the necessary documentation and the application that will need time, energy, attention and complete documentation. The effort to complete documentation helps for the Speedy decision and approval but the complete process generally takes 4 to 8 weeks for the decision for this type of loan.
Types of SBA loan programs:
There are many types of SBA loan programs but generally three programs are considered to be quite popular:
The 7(a) Loan program:
This type of loan is suitable for businesses looking for working capital or startup of new businesses.
The small-business microloan program:
According to this type of program the SBA works as a third party to loan money to nonprofit lenders. Thereafter, these non-profit lenders offer loans for startups and small businesses up to $50000 to run their companies.
SBA CDC public 504 Loan program:
This program is for those looking for a significant amount of funds to expand or need more long-term Funding Solution. The process and qualifications for this type of SBA Loans is far more complex and complicated requiring multiple parties for much longer and lengthy paperwork and processes before this loan can be approved.
SBA 7(a) LOAN PROGRAM:
The small business owners generally looking for their first time SBA loan are likely to end up with 7(a) loan program. The SBA 7(a) loan is widely considered as a general-purpose business loans giving a wide variety of options for the businesses as to how this Loan Fund can be utilized by the small businesses. There are limitations to this loan especially the business owner cannot use this loan to pay delinquent taxes, buy out a business from a business owner or reimburse a business expenses that is owed to pay their pending invoices.
The SBA Loan 7(a) category has other sub-programs which are as follows:
- SBA Express.
- 7(a) Small Loan.
- Veterans Advantage.
- Export Working Capital & Export Lines.
- CAP lines.
- SBA Express:
The SBA Express Loan, in terms of criteria and purpose, is similar to the conventional 7(a) program. It provides the same fantastic possibility as short-term working capital, but it is much faster. The SBA Express Loan is an excellent option for firms searching for a loan in days rather than months.
Of all the SBA loans, this one is likely the simplest. This is assuming, of course, that you have all the necessary documents ready and in order.
- 7(a) Small Loan:
This SBA 7(a) Small Loan is very good for Businesses in need for $350000 or less. The processing time for this loan is 5 to 10 days making it a very preferable approach to securing a loan fairly quickly with all the appropriate documentations.
- Veterans Advantage:
Veterans can take advantage of this loan. It can be used for a variety of purposes, including expansion, acquisition of a new firm, renovations, construction, equipment, operational capital, debt refinancing, and more. This loan includes loan amounts up to $5 million and has reduced guarantee fees for veteran-owned enterprises. SBA Veteran loan has terms ranging from 10 to 25 years, depending on the use.
- Export Working Capital & Export Express:
This program is good for credit enhancement. This initiative allows approved lenders issue a 90 percent guarantee for Businesses on export loans. This loan is provided by a network of SBA Senior International Credit Officers who are well-versed in the trade finance industry. Standard term loans or short-term standard loans of up to $5 million are available.
There’s also an Export Express Program offering Loan and Credit-Line up to $500,000 with proper documentations and application.
- CAP lines:
This program offers lines of credit through the SBA CAP Line loan. It includes a fixed-guarantee and a revolving credit line of up to $5 million. Borrowers can secure the line with either company or personal assets and use the money for a number of purposes, including short-term or seasonal capital. This account offers a 10-year revolving credit line.