SBA Business FAQs
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:: Question

SBA Loans

  How Long Does It Take For A SBA Loan To Be Funded?

:: Answer

SBA Loan Processing Can Be Done As Fast As 15 Days.  This Depends Greatly On The Quality Of The Packet and The Complexity Of Your Business Idea. 

Using Our Services Can Considerably Cut Down On Your SBA Loan Processing Time.  We Know How The Packet Needs to Be Set Up For The Lenders To Approve. 

SBA Loan Funding Can Be Done Within 30 Days.  Some SBA Loans Have Been Funded As Quick As 15 Days, While Others Have Taken 45 Days.  This Really Depends On The Quality Of Information You Submit and The Complexity Of Your Business Idea.

  

:: Question

  How Much Paperwork Is Involved In Getting A SBA Loan?

:: Answer 

  Like All Loans, There Is A Good Deal Of Documentation Needed For A SBA Loan As Well.  All Paperwork Is Available At www.sba.gov.  It is also available on our Tab "Forms".  The Fastest Way Is To Use Our Web Forms.  This Cuts Down On The Duplicate Information You Have To Enter.  Our Web Forms Will Populate All Forms With The Required Information, So You Only Have To Enter The Information Once.   Very Quick and Streamlined.

  

:: Question

  What Does The SBA Consider To Be A Small Business When Applying For SBA Loans?

:: Answer 

 When Applying For A SBA Loan, The Following SBA Criteria Fits Each Industry:

Manufacturing:  Maximum Number Of Employees May Be From 500 To 1000 Employees.  This Varies Depending On Which Industry Your Business Falls Into.

Wholesale:  Maximum Number Of Employees Must Not Be Above 100 Employees.

Services:  Annual Sales Must Not Exceed $6 Million To $ 25 million.  This Depends On The Industry Your Business Falls Into.

Retailing:  Annual Sales Must Not Exceed $ 6 Million To $ 25 Million.  This Again Depends On The Industry Your Business Falls Into.

Just To Give You An Idea, Over 90% of  US Companies Are Considered "Small Businesses" By The SBA Standards.  This Is Great News For You As You Submit  A SBA Loan.

  

:: Question

  When Applying For SBA Loans, What Can I Use The Loan Money For?

:: Answer 

 The SBA Does A Really Nice Job On Laying Out These Guidelines.  It Does Not Matter If You are Starting A Business, Buying A Business, Expanding A Business.  You Can Use The Money For The Following Areas:

  • Make Improvements On Your Current Small Business
  • Purchase Real Estate For Your Small Business
  • Purchase Equipment For Your Small Business
  • Purchase Inventory For Your Small Business
  • Provide Working Capital For Your Small Business
  • Consolidate Debt From Your Small Business
  • Buy Another Business
  • To Assist In Job Creation And Help The Local Economy
  • Blend The SBA Loan For Multiple Uses

There Are Many Uses That Will Qualify You For A SBA Loan.  You Can Contact Us For A Free Consultation And Get Your SBA Loan Package Started.

  

:: Question

  What Costs Will I Incur With A SBA Loan?

:: Answer 

 The basic costs associated with a SBA Loan are as follows.

  • Interest Rate For The Loan
  • SBA one time guarantee Fee.  Ranges from 2.0% to 3.5%
  • Possible Consulting Fee, Loan Packaging and processing fee, recording fee, appraisals and title insurance fees.  These are general fees and are not charged with every loan.

Fees are generally the same as with other loans.  Contact us and we can go over the entire system.

  

:: Question

  How Much Can I Borrow On SBA Loans?

:: Answer 

  $ 1,000,000 is the maximum amount by law that the SBA can guarantee.  You may borrow up to $ 2,000,000 under the SBA program.  Make sure that your business plan and cash flow / cash projections support the amount of money you are requesting.  The banks will look at this very carefully.

  

:: Question

  What Requirement Must I Meet For SBA Loans?

:: Answer 

 Credit Score:  The higher your credit score the easier it is to get approved for your SBA Loan(as long as your business idea is mainstream).  The existing business and business owners must have a satisfactory credit report.  If there are negative items (derogatory) it does not mean that your SBA Loan Package will be denied, but you will have to explain the situation in detail.

Experience:  The SBA wants you to have experience in the Industry that you are trying to obtain a SBA Loan.  They also want you to have management experience if you are going to have employees.

Collateral:  You will need to offer collateral of 15 – 25 % of your SBA Loan.  You should have sufficient collateral to cover your SBA Loan should you default on the SBA Loan.  Collateral makes the loan easier to acquire.  If you do not have collateral you may still qualify for a SBA Loan.

Repayment:  You will need to demonstrate you ability to repay the SBA Loan and other obligations out of the business profits.

Down Payment:  SBA requires the following down payment for your SBA Loan.

  • 10% to 20% For Real Estate Purchases
  • Up To 30% For The Purchase Of A Business
  • Up To 33%  On Start-Ups

Your source of the down payment funds needs to be verified and must not be from borrowed funds.  If you to use borrowed funds for the down payment, this must be disclosed to the SBA.

:: Question

  What is the procedure for SBA Loan approval?

:: Answer 

  These are the steps for SBA Loan approval:

  • Initial Eligibility Interview with a Member of Our Team to determine the feasibility of the proposal and to insure that your business idea and business plan meets the SBA’s and the SBA Lender’s guidelines.   Usually within a week we can give you some feedback on your SBA Loan’s chance for approval.
  • Begin the SBA Loan Packaging: After the initial eligibility interview, SBA Business  will begin the SBA Loan packaging by collecting all the documents, including financial information, such as tax returns, financial statements, cash projects, collateral lists,credit reports, ect.
  • SBA Lender’s Initial Approval: The SBA Lender’s preliminary approval of your SBA Loan packet is obtained and they then issues a Letter Of Intent.  The SBA Lender’s Letter Of Intent is subject to verification of financial data and appraisals.
  • SBA Loan packaging: After the Letter Of Intent is issued by the SBA Lender, SBA Business will assemble the SBA Loan package.  
  •  SBA Loan Submission To Bank: We (you and us) will submit your SBA Loan to the selected SBA Lender.
  • Submission of your SBA Loan To The SBA: Your SBA Loan is sent to the SBA from the SBA Lender who sent you the Letter Of Intent.  The SBA is to concur/approve the SBA Loan.
  • SBA Lender Funding:  After your SBA Loan is approved by the SBA, the closing documentation will be prepared.  The applicant will sign all documents at the SBA Lender’s location, and your SBA Loan will be funded.

  

:: Question

  What are the advantages of Financing Equipment with my SBA Loan?

:: Answer 

  With your SBA Loan you can finance 100% of cost of equipment.  Your SBA Loan will also include installation costs.  This is a huge advantage over leasing as your installation costs are not covered on Leased Equipment.  Your SBA loan does not carry a penalty for pre-payments. 

  

:: Question

  I need to Refinance My Debt….Can I use a SBA Loan For Refinancing my Current Business Debt?

:: Answer 

 Yes, but there are some criteria that you must meet to obtain a SBA Loan in this manner.

  • You will need to show the business benefit from refinancing this debt.  Your cash flow projects will be critical in this approval process.  You will need to show that your cash flow projections will be able to pay off your SBA Loan on time.
  • You will need to fully secure the note with collateral.
  • You will also need to show that all prior loans for this business were in fact used for this business and the money was used for a valid Business Reasons.
  • You will need to update your business plan and show the ability to repay the loan upon the end of your SBA Loan’s duration.

  

:: Question

  I Need More Working Capital To Grow My Business.  Can I use a SBA Loan for working capital?

:: Answer 

Yes, there are 2 different types of working capital

The first is Conventional Lines Of Credit.  The following are possible uses for Lines of Credit

  • Use for seasonal up and downs of your business
  • Sales increase which causes a larger accounts receivable.  You have to wait to be paid, your credit line can be used to cover the time you have to wait to be paid.
  • Projections for your business that will increase revenues, but current cash flow will not support this increase in revenues by itself.

The second is Working Capital Loan.

Business Expansions:

  • Finance Additional Inventory
  • Open a second business location
  • Expand into a new line of products
  • Add additional employees/ head count

Your cash flow projections will need to show you are able to pay off your SBA Loan on or before the scheduled end of the loan.

 

  

:: Question

  How can I use a SBA Loan with a start up business?

:: Answer 

 If you have been looking for funding to start a new business, you have probably already noticed that commercial banks are very hesitant about lending you the money. 

This is where the SBA comes in and saves the day.  The SBA will guaranty your SBA Loan through SBA approved lenders. 

Here are the top 3 qualifications you must meet.

  • You must provide collateral for the loan
  • You must provide up to 33% of the funds for the loan.
  • You must have experience in this line of business.  The SBA wants to make sure you have a high degree of knowledge in the industry you will start your business in.

Your SBA Start-Up Loan can be used in the following areas:

  • New Building Construction
  • Remodeling or improving an existing building
  • The equipment and / or machinery for your new business
  • Furniture, Fixtures and office equipment
  • Setting up your inventory and inventory control systems
  • To have working capital on hand to insure your business has the funds it needs to succeed.

  

:: Question

  Does the SBA offer business assistance?

:: Answer 

 Yes the SBA actually has a really good system in place called "SCORE".  Read the quote below. 

"There are 12,400 Service Corps of Retired Executives (SCORE) chapters and approximately 1,000 Small Business Development Centers (SBDC) nationwide. SCORE provides free, expert advice based on many years of firsthand experience and shared knowledge, on virtually every aspect of business. The SBDC provides a variety of management and technical assistance services to small businesses and potential entrepreneurs. To locate the nearest SCORE or SBDC in your area, please visit us at http://www.sba.gov/services/counseling/index.html and click on your state."

We highly recommend the SCORE network.

  


:: Question

  Why should I consider a SBA Loan instead of conventional Loan Financing?

:: Answer 

 This is a common question that we are asked all the time.  Here is your answer To SBA Loan Advantages

  • SBA Loan terms are generally longer in duration than conventional loans.  As result the monthly payments are lower.  Sometimes the payment can be as much as 10% lower.  Very significant.
  • SBA Loans do not have balloon payments. 
  • SBA Loans have a monthly set payment (if you go for a fixed loan) and are fully amortized over the life of the SBA Loan.
  • SBA accepts single purpose Real Estate loans.
  • SBA Loans do not require "Net Stabilized" rent income on SBA 7(a) Loans
  • Certain types of SBA Loans can be paid off early without penalty
  • SBA Loans do not require a secondary source of repayment
  • SBA Loan Program has a special program for Veterans and Military Members.

As you can see there are many advantages to acquiring a SBA Loan.  Call one of our experts to day and we will assist you through the entire process.

 

 

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