The Small Business Administration (SBA) offers two primary business loan options: the 7(a) guarantee loan and the 504 fixed-asset loan. The 7(a) guarantee loan is the more common for small businesses with a limited track record of time in business (typically 2 years) and requires a personal guarantee and pledged collateral. The 504 fixed-asset loan is typically used to finance equipment or real estate. There are several requirements that must be met for each of these loan products. Most SBA loans are typically average $150,000 and take approximately 90 days to obtain. Eligibility requirements are very specific and therefore limited exceptions are considered in the underwriting process.
- qualified industry
- no federal or state government deficits
- minimum time in business
- sufficient cash flow
- demonstrate that all available personal and traditional bank funding sources have been exhausted
- required assets to pledge as collateral to guarantee the loan