SBA Loan Programs

7(a) Loans

This is the SBA’s primary business loan program. It generally is used for business start-ups and to meet the varied short- and long-term needs of existing small businesses. Under 7(a) the agency guarantees loans to small businesses that cannot obtain financing on reasonable terms through other channels.

A 7(a) loan may be used for most business purposes including start-up, expansion, equipment purchases, working capital, inventory or real-estate acquisition. Loans cannot be used for speculative purposes.

Participating lenders -— small business lenders that have entered into lending agreements with the SBA -— provide loans in conjunction with SBA guaranties. By reducing risk, guaranties expand the lenders’ ability to make small business loans.

Participating lenders approve loans, request SBA guaranties and service the loans. Generally, the SBA can guarantee up to $750,000 of a private-sector loan. The guaranty rate is 80 percent on loans of $100,000 or less and 75 percent on loans greater than $100,000.

Interest rates for 7(a) loans are negotiated between the applicant and the lender. However, lenders generally may not charge an interest rate on loans that exceeds 2.75 percent over the prime lending rate, except for loans under $50,000, where the rates may be slightly higher. The loan can extend to 10 years for working capital and 25 years for fixed assets. Your local SBA office can provide you with more details on the program. You can also access the SBA’s Web site at www.sba.gov/financing.

Certified & Preferred Lenders

The most active and expert participating lenders qualify for either the SBA’s Certified Lenders Program or Preferred Lenders Program. Both programs offer a quicker turnaround on your loan application. Certified lenders receive a partial delegation of authority to approve loans and receive a response on their loan guaranty applications from the SBA within three days. Preferred lenders have full authority to approve loans and do not submit applications to the SBA. A list of participants in these programs is available through your local SBA office.

Low Documentation Loan (SBALowDoc)

If you are looking for a small business loan of $150,000 or less, SBALowDoc may be your answer. It features a one-page SBA application, which cuts the paperwork burden for both you and your lender. Once your application has satisfied the lender’s requirements, you and the lender together complete the SBA’s one-page guaranty application. If the loan is approved, the SBA will guarantee 75 to 80 percent of the amount and provide a 36-hour turnaround to the lender.

SBAExpress

SBAExpress encourages lenders to make more small loans to small businesses. Participating lenders use their own documentation and procedures to approve, service and liquidate loans of up to $150,000. In return, the SBA guarantees up to 50 percent of each loan. SBAExpress lenders can also offer revolving lines of credit to borrowers. This new loan program is being piloted with selected banks nationwide.

SBA Loan Prequalification Program

Offered to armed forces veterans, minorities, women, exporters, rural small business owners and business owners in certain specialized industries, this program enables the SBA to prequalify an applicant for a 7(a) loan guaranty before the applicant goes to a bank. The maximum loan amount is $250,000. SBA-designated intermediaries can work with you to review and strengthen your loan application, apply to the SBA, and upon approval of the application, find an interested lender. The application will focus on your character, credit, experience and reliability rather than assets.

CAPLines

This program features five types of loans for financing the short-term and cyclical working-capital needs of small businesses: Seasonal, Contract, Builders, Standard Asset-Based, and Small Asset-Based. The SBA can generally guarantee up to $750,000 of a loan under the program. If you receive a CAPLines loan, it will generally be advanced against your existing or anticipated inventory and/or accounts receivable.

Defense Loan & Technical Assistance (DELTA)

Created for defense-dependent small firms that have been adversely affected by defense cuts, DELTA provides financial and technical assistance to help these firms diversify into the commercial market. The SBA also leverages federal, state and private-sector resources to provide the technical assistance. Loan proceeds must be used to retain jobs of defense workers, create new jobs in impacted communities, or modernize or expand in order to remain in the national technical and industrial base. A DELTA loan may be acquired through the 7(a) and/or 504 loan programs. The maximum DELTA loan is $1.25 million.

Community Adjustment & Investment (CAIP)

A partnership between the federal government and the North American Development Bank, CAIP loans are intended to create new, sustainable jobs and preserve existing jobs in businesses at risk due to changing trade patterns with Canada and Mexico. CAIP is available in selected geographic areas. Eligibility for the program is determined from an analysis of NAFTA-related job losses in an area/community in relation to local unemployment rates. As a CAIP loan applicant, you must demonstrate that within 24 months, and as a result of the loan, you will create or preserve at least one job per $70,000 of federally guaranteed funds.

Export Working Capital Program (EWCP)

The EWCP provides short-term loans to small businesses for export-related transactions. With an EWCP loan, proceeds from export sales are the primary source of repayment. Under the EWCP, the SBA can guarantee up to 90 percent of a secured loan or $750,000, whichever is less. Typically, loan maturity either matches a sales transaction cycle with a term of up to 18 months or supports a line of credit with a term of up to 12 months.

International Trade Loan (ITL)

This program offers short- and long-term financing to small businesses involved in exporting, as well as to businesses adversely affected by import competition. The SBA can guarantee up to $1.25 million for a combination of fixed-asset financing and working capital. The working capital portion cannot exceed $750,000.

Available in selected locations around the country, the MicroLoan Program provides short-term loans of up to $25,000. If you need a loan for small-scale financing purposes such as inventory, supplies and working capital (but not to pay existing debts), this program may be your answer. MicroLoans are made through SBA-approved nonprofit groups, known as intermediaries, which also provide counseling and technical assistance. Call your local SBA office to locate the nearest SBA-designated group.

The 504 Program provides long-term, fixed-asset financing through certified development companies. These nonprofit corporations are sponsored by private-sector organizations or by state and local governments to contribute to economic development through CDCs and private-sector lenders. The SBA can guarantee debentures covering as much as 40 percent of a 504 project. The maximum SBA debenture generally is $750,000 (up to $1 million in some cases). DELTA funding is also available under this program.