Find the Lowest Rates on SBA Loans

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SBA Loans at a Glance

Under the U.S. Small Business Administration’s various “SBA loan” programs, you can borrow money for nearly any business purpose—including adding to working capital, purchasing inventory or equipment, refinancing other debts, buying real estate, or even funding the acquisition of other businesses.

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Maximum Loan Amount

$5,000 - $5 million

SBA Loan term icon

Loan Term

5 - 25 years

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Interest Rates

Starting at 6.5%

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Speed

As little as 3 weeks

The Pros and Cons

  • Lowest down payments
  • Longest payment terms
  • Reasonable interest rates
  • Suitable for a wide range of business purposes
  • Lengthy paperwork
  • Longer approval times
  • May require collateral

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“SBA Lenders” with Fundera Today!

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Compared to Other Loan Types...

Loan Type
Time to Funding
Avg. Interest Rates
Time to Funding
As little as 3 weeks
Avg. Interest Rates
Starting at 6.5%
Time to Funding
As little as 2 days
Avg. Interest Rates
7 - 30%
Time to Funding
As little as 2 days
Avg. Interest Rates
8 - 30%
Time to Funding
As little as 1 day
Avg. Interest Rates
7 to 25%
Time to Funding
As little as 1 day
Avg. Interest Rates
Approx. 3% + %/wk outstanding
Time to Funding
As little as 1 day
Avg. Interest Rates
Starting at 10%
Time to Funding
1 week
Avg. Interest Rates
1.14 - 1.18
Time to Funding
As little as 2 weeks
Avg. Interest Rates
7.9 - 19.9%
Time to Funding
As little as 1 day
Avg. Interest Rates
5.99 - 36% APR

Who Qualifies for an SBA Loan?

Securing an SBA loan is no easy feat…

So how can you get one?

As it turns out, many businesses—including small or newer ones—can qualify for an SBA loan. The most important factor will be your credit score: SBA loans are for business owners with strong borrowing histories.

Be prepared: SBA loans usually require a lot of time, energy, attention, and documentation.

It’s definitely not a loan that you’ll apply to and receive the funding for in a few days, but it is a loan you can use grow you business, refinance your other debt, and more at the lowest available rates.

You might find it difficult to qualify for an SBA loan if your company has a limited track record or, especially, if your credit is poor. After all, the SBA and your lender are sticking their neck out on the belief that you’re a reliable borrower.

Most Customers Who Were Approved Had...

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Annual Revenue

Over $180,000
SBA Loan Credit Score icon

Credit Score

680
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Time in Business

Over 4 years

**Based on past Fundera customers.

What Documents Will I Need to Apply?

Driver's License
Voided Business Check
Bank Statements
Balance Sheet
Profit & Loss Statements
Business Tax Returns
Personal Tax Returns
Business Plan
Business Debt Schedule
“
SBA loans are a great financing solution that gets rid of cash flow constraints thanks to their longer terms, often at the lowest rates.
Abbey Young
Account Manager
Meet the Fundera Team

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How Do SBA Loans Work?

Almost every small business owner wants to know how to qualify for an SBA loan. As one of the lowest-cost products out there, SBA loans are the holy grail when it comes to growing your business affordably.

But aren’t they impossible to get approved for?

At Fundera, we’ve helped thousands of small business owners successfully secure SBA loans. With all that experience—and data—under our belt, we’re confident we can give you the information you need to apply for an SBA loan.

By understanding how the product works and what exactly the eligibility requirements are, you’ll know if an SBA loan is the right product for your business…

...And if not, we’ll show you what you need to get there soon.

Let’s get started.

SBA Loans: The Fundamentals

First things first: where do SBA loans come from?

The Small Business Administration (SBA) is a federal agency dedicated to helping entrepreneurs improve their small businesses, take advantage of contracting opportunities, and get better access to small business loans.

We’ll focus on the last one here.

The most common misconception about the SBA is that the agency lends money to businesses.

But actually, that’s not true—in most cases, the SBA doesn’t directly lend money to businesses. So what is an “SBA loan” if not a loan from the SBA?

Instead, you get SBA loans from a bank that participates in SBA financing. The SBA uses federal money to guarantee a percentage of those loans to the banks, so financial institutions have more incentive to lend money to small businesses.

Simply put, the SBA backs up a portion of the bank’s small business loan, meaning less risk for lenders.

Because of this guarantee, bankers are more inclined to lend you money even if you don’t fit their strict credit criteria. They can service a whole different set of customers than usual—without making too many sacrifices.

What It’s Like to Apply for an SBA Loan

What does all this mean for you?

While an SBA loan is cost-effective, you’re still working with a bank—and banks are nothing if not slow.

At plenty of major banks, getting an SBA loan can still be a lengthy, complicated process. Lenders want to review your credit and financial statements, and might expect you to have collateral to secure the loan. Even with the government guarantee, many small businesses don’t wind up qualifying for SBA loans. And if they do, the process could take months.

On the other hand, an SBA loan’s low interest rates and long repayment terms are almost always worth the wait.

So—what’s next? What is the actual application like?

Here’s the deal:

If you’d like to apply for SBA financing, you can expect to complete an extensive loan application. You’ll need to provide documents like financial statements, information on your collateral, a description of your business, and a statement of how you’ll use the loan proceeds, among others.

Your bank will look for applicants with good credit, a solid business plan, and a demonstrated ability to repay the loan. Your borrowing history is especially important to a bank.

Picking the Right SBA Loan Program

By the way, there are a few different kinds of SBA loans to pick from.

How do you know which one is right for you?

The SBA loan program you’ll want to apply for depends on the size, age, and goals of your business.

The most popular programs are the SBA 7(a) loan, which is for plenty of general business purposes, and the CDC/504 loan, which is most often used to purchase major fixed assets like equipment and commercial real estate.

The SBA also offers a Microloan program for small or new businesses searching for loans under $50,000.

If you’re feeling unsure about which SBA loan makes sense, Fundera can walk you through your options and help you decide which program is right for you—and whether you’ll qualify.

And if you’re not there yet, we’ll work with you to graduate your business up to an SBA loan—one of the longest-term and most affordable business loan options out there.

Apply to the Industry’s Best
“SBA Lenders” with Fundera Today!

Find Out If You Qualify

What Will An SBA Loan Cost You?

What’s the bottom line for your business’s bottom line? How much will an SBA loan cost? Well, the cost and repayment of your SBA loan depends on the program you choose. Here are the fees, interest rates, and repayment terms usually associated with each of SBA’s most popular loan programs.

7(a) SBA Loan Program

Fees: A guarantee fee, based on your loan’s maturity and the dollar amount guaranteed, might be included in the total cost of the loan.

(Remember: the SBA isn’t lending to you directly—and it doesn’t guarantee 100% of the bank’s loan. That’s why “dollar amount guaranteed” is different from “total loan amount.”)

The lender originally pays the guarantee fee, but it also can just pass that expense on to the borrower. These fees range from 0% for loans under $150,000 to 3.5% on loans of more than $700,000.

There’s also an additional fee of 0.25% on any guaranteed portion of more than $1 million.

Don’t feel too overwhelmed, though.

These fees don’t hold a candle to the amount of cash you’re saving by taking on an SBA loan instead of something smaller, faster, and more expensive.

Interest: Exactly how much will this capital cost?

7(a) SBA loans come with interest rates in either fixed or variable (typically adjusted quarterly) varieties. Your bank lender determines which it will offer.

To protect borrowers, the SBA puts a ceiling on 7(a) loan rates by limiting the “spread” a bank is allowed to apply on top of the loan’s base interest rate.

In other words, the SBA restricts how much a bank can make off your SBA loan.

If your loan term is less than 7 years, the maximum spread will be at most 2.25%. For longer loans, that spread increases to 2.75%.

Basically, you’ll wind up paying a rate between 6 - 13%.

Repayment: What would a 7(a) SBA loan mean for your business’s cash flow?

You can expect monthly payments for 25 years for real estate, 10 years for equipment, and generally up to 7 years for working capital.

Keep in mind: these are the longest terms you’ll find, giving you plenty of time to figure out how to make each payment and spreading those large loan amounts over many years.

CDC/504 SBA Loan Program

Fees: 504 SBA loan fees are usually about 3% of the loan amount—and can sometimes be financed with the loan.

Also, be aware that you’ll need to put around 10% of your purchase down to secure 504 SBA financing.

Interest: The SBA’s 504 loan program is one of the most complicated financing products out there.

We’ll give you the short and long of it.

The short story: You can probably expect an interest rate of 5 - 6% on your loan. You won’t know the exact rate until roughly 45 days after the fact, though.

The long story, in case you’re curious: The 504 loan program involves two individual loans—one from a bank (which is 50% of the loan) and one facilitated by a Certified Development Corporation (which is usually 40% of the loan). The latter gets grouped together when all CDCs pool their projects, and through underwriters, auction the pool to investors.

On the one hand, that means you don’t get to know the exact rate until the sale of the pool, which is approximately 45 days after you’ve closed with the CDC.

On the other, historically speaking, you’re pretty set for a pool rate between 4 - 5%. When blended with your bank rate, the total should come out to around 5 - 6%.

Hey—we told you it was complicated. But you don’t really need to worry: it all gets handled automatically.

Repayment: You’ll find maturity terms of 10 and 20 years with the 504 SBA loan program.

Microloan Program

Fees: None!

Interest: Rates range over 8 - 13% for the microloan program.

Repayment: Loan repayment terms depend on the loan amount, use of funding, and other criteria, but the maximum repayment term allowed for an SBA microloan is 6 years. As for the repayment schedule: like with other SBA loans, you can expect monthly charges.

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