An SBA loan is a business loan that is guaranteed by the U.S. Small Business Administration (SBA) . These loans can be used by businesses to cover startup costs, expansions, real estate purchases, or other business expenses. The SBA works with a network of approved financial institutions and traditional banks that lend money to small businesses, and the SBA partially guarantees the loans. There are several types of SBA loans, including:
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7(a) Loans: The most common type of SBA loan, which allows businesses to borrow up to $5 million for general business expenses or to fund purchases and expansion.
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Express Loans: A type of 7(a) loan that allows businesses to borrow up to $500,000 for the purchase of long-term, fixed assets like land, machinery, and facilities.
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Working Capital Loans: Loans offered by the SBA to businesses that need to solve short-term cash flow problems or meet seasonal financing obligations.
To qualify for an SBA loan, businesses must meet certain eligibility requirements, such as being creditworthy and demonstrating a reasonable ability to repay the loan. The loan application process involves working with an SBA-approved lender, who will help determine which documents are needed based on the individual circumstances of the business. SBA-guaranteed loans generally have rates and fees that are comparable to non-guaranteed loans, and some loans come with continued support to help businesses start and run their business.
