SBA Loan Guide

What is an SBA loan?

SBA loans are small-business loans partially guaranteed by the SBA and issued by approved financial institutions, which are typically traditional banks.

Summary of SBA loan types

What is an SBA loan guarantee?

Since the SBA guarantees up to $3.75 million of an SBA loan, if a borrower were to default, the SBA would pay their guaranteed amount. This safety net allows lenders to offer better terms for payment because with SBA support, most lenders are willing to stretch the payment terms out over a longer period. This reduces the monthly payment amount and eases the cash drain on the business.

The SBA does require a personal guarantee from owners with more than a 20 percent stake in the business. This personal guarantee uses your company’s assets as collateral if your business is unable to make payments.

How do I get an SBA loan?

Applying for SBA loans typically take somewhere in the range of weeks to months. Because SBA loans involve a government entity, their application process is notoriously rigorous and often restrictive.

If you think you qualify, the best place to start is the SBA website. Make sure your business does not fall into their list of ineligible businesses.

Here are some of the documents you'll need before applying:

• SBA’s borrower information form

• Statement of personal history

• Personal financial statement

• Personal income tax returns (previous three years)

• Business tax returns (previous three years)

• Business certificate or license

• Business lease

• Loan application history

To find the right bank for an SBA loan, an SBA broker is likely the simplest and most direct option.

The Bottom Line on SBA Loans

With some of the highest loan amounts, the longest repayment terms, and the lowest APRs available to small businesses, an SBA loan is a great financing option for small businesses. If you believe you can qualify for an SBA loan, then you should almost certainly consider applying for it.