What is an SBA Loan?

SBA loans are business loans guaranteed by the Small Business Administration. This government agency, the SBA, has multiple funding programs and provides loan guarantees of up to 90% of the loan amount, which is ultimately provided through an SBA-approved lender—typically a bank.

The two main SBA loan programs let you borrow money for nearly any business purpose—including working capital, purchasing inventory or equipment, refinancing other debts, or buying real estate—through these SBA-guaranteed loans.

SBA Loan Pros

  • Low down payments
  • Longer payment terms
  • Reasonable interest rates
  • Suitable for a wide range of business purposes

SBA Loan Cons

  • Lengthy paperwork
  • Longer approval times
  • May require collateral

SBA loan parameters may differ based on the type or category of business applying.

SBA Loans can be a bit complicated and involved. They usually require a lot of time, energy, attention, and documentation. PHD Financial’s streamlined process will make things as painless as possible. We are the liaison between you and the lender, and once you provide us with the requested paperwork, we take it from there.

PHD Financial has significant success getting SBA funding for clients.

It’s what we do – and we look forward to working with you in obtaining your SBA loan.

Contact PHD Financial today to see if an SBA loan is right for you.

Choosing the Right SBA Loan Program

The SBA loan program that PHD Financial will place you with depends on the size, age, and goals of your business.

The SBA (7)a Loan

The most popular SBA loan program is the SBA 7(a) loan.

This works best for most businesses with general financing needs—like expanding, working capital, refinancing old debt, or renovating a location.

Some Highlights of an SBA 7(a) loan:

  • Up to $5M in loan amount
  • Repayment terms of up to 10 years (for working capital loans) or up to 25 years (for commercial real estate loans)
  • For general business financing needs

The SBA CDC/504 Loan

The CDC/504 loan is another popular program, but a little more specific. A CDC/504 loan is used to purchase major fixed assets—mostly large equipment and commercial real estate.

Some details of a CDC/504 loan:

  • Up to $5.5M in loan amount
  • Repayment terms of 10 or 20 years
  • For the purchase of major fixed assets

The SBA Microloan Program

An SBA microloan is a loan between $500 and $50,000 from an intermediary nonprofit to the owner of a small business or startup. The money originates from the SBA, which initially lends the money at a discounted rate to the intermediary.

PHD Financial may secure you an SBA Microloan for a range of purposes, including working capital or buying equipment, machinery or supplies.

There are no fees associated with microloans, and rates range between 8% – 13 % for the microloan program.

Microloans are administered by partnering financial institutions. The institution we’ll work with is the one that sets the interest rate on the microloan, depending on your creditworthiness and the specifics of your small business.

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 six years.

As for the repayment schedule, like with other SBA loans, you can expect monthly charges.

Of course there are other types of loans that might fit your business needs even better like USDA loans, CMBS loans, bridge financing, or other loan products.

For more on these types of loans, click above on the one you would like to know more about.

Qualifying for an SBA Loan

Many businesses—including small or newer ones—can qualify for an SBA loan. SBA loans are certainly a fit for growing your business and refinancing your other debt at the lowest available rates.

You might find it difficult to qualify for an SBA loan if your company has a limited track record, but the most important factor will be your credit score.

SBA loans are for business owners with strong borrowing histories.

If necessary, PHD Financial works closely with clients in making sure they are creditworthy. Very often we guide clients through the process of improving credit scores. We’ll make recommendations on how to do that, and even work with creditors to get old inquiries or previously settled debt removed from your credit report. This truly sets PHD Financial apart from others in the lending arena.

Most borrowers get approved for SBA loans if they have

  • Annual Revenue over $180K
  • Credit Score 680 or higher
  • At least three years in business

As with other types of loans, the requirements for an SBA Loan can also depend on the type of business or property you want to fund.

The SBA Loan Application Process

PHD Financial works hard to make applying for an SBA loan for your business as efficient as possible. Once we collect your paperwork, we go to work to match you with the best lender and loan product.

Here is an example of the documentation required, and what we will need from you to get started.

Guarantor Documents (for each 20%+ owner)

  • Personal Financial Statement
  • Last 3 Years Personal Tax Returns
  • Credit Karma Credit Report
  • Resume
  • Copy of Drivers License
  • Copy of Passport
  • Proof of Funds

Business Documents

  • Last 3 Years Business Tax Returns
  • Last 3 Years P&Ls (year-end)
  • Year to Date P&L (signed)
  • Year to Date Balance Sheet (signed)
  • Copies of most recent mortgage statements for loans (If refinance)

Affiliate Documents (Guarantors own 20%+)

  • Last 3 Years Business Tax Returns
  • Last 3 Years P&Ls (year-end)
  • Year to Date P&L (signed)
  • Year to Date Balance Sheet (signed)

Depending on what category of business you are in, you will need to supply reports and documentation that provide information specific to your industry. For example, a hotelier would need to provide ADR and statistics or STARR reports.