Everything You Should Know About SBA Small Business Loans
If you lack the funds to keep your operations going, applying for a small business loan is an effective course of action. This type of financial aid is a viable choice for up-and-coming entrepreneurs struggling to cover short- and long-term expenses.
In this article, we break down the most popular SBA small business loans and address:
We will also explain how to start the application process using DoNotPay—a powerful AI-operated app that can help you organize the required paperwork and generate a flawless loan request letter with speed and efficiency.
The Small Business Administration (SBA) is a government-backed agency that secures funding for small to medium-sized businesses. Instead of the SBA issuing the funds, the federal small business loans are provided by private lenders, such as banks, credit unions, and non-profit organizations. The SBA acts as a mediator and loan guarantee.
You can apply for a wide range of programs that cover specific business-related purposes, such as:
- Startup costs
- Business expansion (e.g., acquiring a franchise)
- Renovation and modernization
- Working capital
- Debt consolidation
The SBA loans are a popular form of financial aid since the overall terms and conditions are designed to benefit small-scale businesses. Some of the advantages of getting an SBA small business loan include:
- Competitive rates—The prime rate is the base for SBA interest rates, with the addition of “spread,” i.e., markup rates
- Low fees—Apart from the initial guarantee fee and the annual service fee, you won’t have to worry about additional costs
- Ample loan terms—The repayment window for the SBA loans is incredibly big, with the maximum loan maturity of 25 years
The SBA collaborates with hundreds of lending institutions throughout the U.S. Currently, some of the most active SBA lenders are:
- Live Oak Banking Company
- U.S. Bank, National Association
- Wells Fargo Bank, National Association
- TD Bank, National Association
- Bank of America, National Association
|SBA Loan Program||Maximum Loan Amount||Interest Rates||Loan Purpose|
|SBA 7(a) loans||$5,000,000||Prime rate + 2.25%–4.25% (loans younger than seven years)
Prime rate + 2.75%–4.25% (loans over seven years)
|SBA 504 loans||$5.5 million||Fixed-rate from 2.81% to 4%||
|SBA Express loans||$500,000||Prime rate + 6.5% (loans under $50,000)
Prime rate + 4.5% (loans over $50,000)
|SBA Community Advantage loans||$250,000||Prime rate + 6%||For miscellaneous purposes. It cannot be used for revolving credit|
|SBA Export Express loans||$500,000||Prime rate plus 6.5% (loans under $50,000)
Prime rate plus 4.5% (loans over $50,000)
|Increase in export development|
|SBA international trade loans||$5 million||Prime rate + 2.25%–4.25% (loans under seven years)
Prime rate + 2.75%–4.25% (loans over seven years)
|Small Business Administration disaster loans||$2 million||Fixed rate of 3.75% with a 30-year loan term||Repairment costs after a disaster|
You must ensure you are eligible for a small business loan. The specific requirements may differ depending on the lender and loan program, but the basic qualifications include:
- Businesses registered in the U.S.
- For-profit business
- Business maturity (except for startup loans)
- Good business credit history (credit score above 650)
- Legal and financial documentation:
- Balance, profit and loss, and cash flow statement
- Income tax return (business and personal)
- Active business licenses and leases
- Financial projection for the upcoming year
Note that the SBA requires borrowers to provide collateral when applying for government grants for small business loans. Each person who owns 20% of the company must guarantee the loan terms and conditions will be met.
If you are eligible, you can proceed to choose a lender and fill out an application form using the gathered documentation.
With so many active lenders and loan programs, the application process can quickly become overwhelming. With a DoNotPay subscription, you will be able to complete the mandatory steps and increase the likelihood of getting the desired SBA small business loan and find a suitable lender.
Our Small Business Loan Request Letter product streamlines the administrative procedure and composes a flawless loan request letter.
All you have to do is:
- Gather all the paperwork
- Access the product by logging in to DoNotPay
- Tell us about your small business and provide the necessary details about the loan
- Upload the documents
Once you answer the questions from the chatbot, our AI-powered app will generate your application letter using the provided information.
Don’t have a lender in mind yet? We will provide you with the top three lenders that fit your needs. You only need to access our integrated Find Online Business Loan Lender product and answer a few questions.
Handling annoying administrative issues is the last thing you want to worry about while trying to build a business empire. The good news is that you do not have to! DoNotPay has developed many nifty products that make various pesky tasks easy to complete.
Some of the small-business-related matters we can help you with are:
- Registering your business name, logo, or slogan as a trademark
- Taking out business loans
- Obtaining an Employer Identification Number (EIN)
- Automating the filing of 83(b) election forms
- Requesting your money from customers who won’t pay
- Registering a DMCA agent
DoNotPay can also make communication with your clients or business partners easier as we enable you to fax and mail your letters, forms, and other important documents without leaving your office.
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