Fund My Franchise works directly with the decision makers at some of the largest lending institutions and we have extensive experience with all types of financing, including SBA Loans.
The information below is provided via the SBA.
General Small Business Loans: 7(a)
The SBA works with lenders to provide loans to small businesses. The agency doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions. The SBA reduces risk for lenders and makes it easier for them to access capital. That makes it easier for small businesses to get loans. The SBA 7(a) loan program is the most common funding option offered by the SBA.
- 7(a) Loan Program Eligibility
Lenders and loan programs have unique eligibility requirements. In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding.
- Use of 7(a) Loan Proceeds
If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.
- 7(a) Loan Amounts, Fees & Interest Rates
The specific terms of SBA loans are negotiated between a borrower and an SBA-approved lender. The following program specifics generally apply to 7(a) loans:
685+ credit score
Amortizing Terms – no balloon costs Collateral typically required
Business Plan required
10-30% cash injection
10% minimum cash reserves 401(k)/ROBS Funding Plans can be used in conjunction with 7(a) loans for the required cash injection
- 7(a) Loan Processing Time
7(a) loan processing options have different time frames. In addition to standard procedures, SBA Express loan processing offers an expedited turnaround.
- Special Types of 7(a) Loans
SBA offers several special purpose 7(a) loans to aid businesses that have been impacted by NAFTA, provide financial assistance to Employee Stock Ownership Plans, and help implement pollution controls.
If you are interested in exploring the SBA 7(a) Loan Program please contact us we will help you through the process of applying and getting approved.
SBA Express information
An SBA Express Loan provides low-dollar, short-term loans to small business concerns.
An SBA Express Loan can be up to $150,000. Amounts below $25,000 need no collateral, but amounts above $25,000 should be secured. The Small Business Administration stipulates that the maximum interest lenders can charge is 4.5% for loans above $50,000 and 6.5% for loans $50,000 or below.
The U.S. Small Business Administration provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer SBA Express Loans for eligible borrowers.
Each intermediary lender has its own lending and credit requirements. Generally, intermediaries require business owners to show evidence of how the money will be used to start, expand, or boost their small business, and that they can repay the loan terms. Having a good credit background is a plus.
Use of SBA Express Loan Proceeds
SBA Express Loans can be used for:
- Working capital
- Inventory or supplies
- Furniture or fixtures
- Machinery or equipment
Proceeds from an SBA Express Loan cannot be used to pay existing debts or to purchase real estate.
Repayment Terms, Interest Rates, and Fees
Loan repayment terms vary according to several factors:
- Loan amount
- Planned use of funds
- Requirements determined by the intermediary lender
- Needs of the small business borrower
Contact us if you would like to explore an SBA Express Loan for your business.