Overview If you’re looking to expand your small business, you have numerous financing options. However, not every option is either appealing or accessible, and it can be challenging to determine the right choice. That’s where the SBA comes in. The SBA, or Small Business Administration, offers a variety of loan programs—all with attractive rates and terms—designed to be easily accessible for small business owners. In this article, we’ll give you an overview of these SBA programs, tell you how to qualify for them, how to use these loans, how to apply, and much more. How do SBA loans work The SBA does not give out SBA loans. Instead, the SBA guarantees portions of loans and works with verified lenders to provide financial assistance to small businesses. “Guaranteeing” a loan means the SBA promises to pay back a particular portion of the loan amount if the borrower defaults. This guarantee incentivizes lenders to loan more significant amounts of capital (up to $5M in some cases!) with quality terms that would otherwise be available to borrowers. The SBA also sets up the guidelines and regulations that lenders must follow when loaning capital. In doing so, they create a financing environment that benefits borrowers and eliminates both predatory terms and inconvenient repayment plans. We’ll dive into the specifics of each type of SBA loan later on in the article. Who can qualify for an SBA loan SBA loans are meant for “small businesses.” But what exactly defines a “small” business? Although different lenders use slightly different metrics to categorize businesses, the SBA focuses on a few specific characteristics. It’s important to understand that the best metric used to analyze one business may not be the same metric used to analyze a different business. For example, the SBA evaluates some businesses based on the number of employees. It evaluates other businesses based on their 2-year profit. In general terms, the SBA defines small businesses as businesses with profit that doesn’t exceed $5M over a two-year period. Additionally, most SBA small businesses do not have a net worth that exceeds $15M. They also look at the number of employees and money earned over a set period (usually a year), verified by their receipts. These numbers vary significantly from business to business. These qualifications aside, the SBA only offers financial assistance to for-profit businesses operating in the United States. How to use an SBA loan SBA loans come with a variety of restrictions and parameters. This section will overview how you can (and cannot) use your SBA loan. SBA loans can be used for: Purchasing real estate if you’re using an SBA 504 or 7(a) loan Working capital if you’re using an SBA microloan or 7(a) loan Inventory and equipment Renovations and expansions Land SBA loans cannot be used for: Non-business related purposes, such as purchasing residential property Non-profit businesses, as well as businesses that are political in nature, associated with gambling, life insurance companies, or passive income businesses If you’re utilizing an SBA 504 loan, you cannot use the loan for working capital If you’re using an SBA microloan, you cannot use the loan to purchase real estate How to apply for an SBA loan In order to apply for an SBA loan, you’ll need to take some specific steps. Although the process is straightforward, it’s also time-consuming. Keep that in mind when you apply. Check your eligibility and make sure you meet the requirements The first step of applying to any SBA loan program is understanding if you can qualify for an SBA loan. Your business must be a “small” for-profit business regardless of what loan you’re applying for. You must also make sure that the loan you’re applying for can be used the ways you want it to be used. For example, if you’re looking for a loan to supplement your working capital, you CAN use an SBA 7(a) loan, but you CAN’T use an SBA 504 loan. If you do qualify, calculate the amount of financing you’ll need. Certain SBA loan options won’t suffice if you seek more capital, and guarantees also change depending on how much you borrow. Gather documents Gathering documents represents a large chunk of the application process—and it’s probably the most tedious. You’ll need to fill out numerous forms on the SBA’s official site. The lender you will eventually be working with can help direct you, but if you haven’t found one yet, the SBA’s site will guide you on what exact forms you need to fill out. Aside from those, you also need to submit multiple financial documents for both you and your business. These forms include your business balance sheets, financial plans, and business and personal income tax statements. You’ll also need to provide the necessary business licenses. If it’s necessary, you’ll also document any required collateral at this stage. Finding a Lender Finding a lender can be done earlier, but at this point, if you haven’t already, you need to find a lender to work with. This can be done on your own or with the help of the SBA. Or, you can try Loanbase. Our platform connects lenders and borrowers based on your exact needs and specifications. Our easy-to-use online wizard collects your data and automatically identifies the lenders best suited for your needs. While the SBA limits fees and controls terms to some extent, every lender will present different offerings. It’s essential to shop around and compare the different rates and terms. Submit your application and close the loan At this point, you’re ready to submit all necessary documents and close your loan. There will be a turnaround time for the lender to get back to you. This can take anywhere from a day to a little under two weeks, depending on your loan. At this time, expect to pay any closing fees, these include processing fees, advisor fees, closing fees, and there may be more, depending on your loan. How to repay your SBA loan Your SBA loan will be paid

Overview If you’re looking to expand your business, you’ve probably already done some research on different financing options out there. While wading through the various financing choices presented to you, there’s no doubt that you’ve found some not-so-appealing options. Some have terrible terms, don’t offer a lot of money, or give you insanely high-interest rates. SBA 7(a) loans can be a great recourse in a world full of poor financing options. The SBA 7(a) loan offers to fund up to $5 million, has very manageable interest rates, and repayment conditions that won’t stress you out or break the bank. The SBA 7(a) loan is a fantastic option for a small business owner! In this article, we’ll explain how SBA 7(a) loans work, how you can qualify and apply for them, how they can be used, how you can pay them back, and more. Let’s dive in. SBA 7(a) Loans: How they work The SBA 7(a) loan is one of many financial assistance programs offered by the SBA (Small Business Administration). This program provides small businesses a way to get loans on terms that work for them, with fair and manageable conditions. However, the SBA isn’t the entity that loans you the money. Instead, the SBA guarantees a portion of the loan (up to 85% depending on the lender and the size of the loan) and works with an SBA-partner lender. That partner-lender is the person who issues the loan. Your repayment terms will generally be seven years for loans related to working capital financing, ten years for financing equipment purchases, and 25 years for real estate. The SBA will set a capped interest rate once you find a lender, but this interest rate is not set in stone—you and your lender can negotiate as you see fit. Types of SBA 7(a) Loans Many SBA 7(a) loans exist for specific needs, conditions, and available terms. Here’s a brief overview of each type, as well as a table that outlines the key characteristics and differences between each type. SBA 7(a) Standard These loans have quick turnaround times, a maximum loan amount of $5 million, and guarantees of up to 85% for loans smaller than $150,000. Loans above $150,000 usually get guarantees of around 75%. Collateral is required for loans exceeding $25,000. This may be in the form of your business’s assets or personal property, especially if your business lacks the capital or assets to meet the collateral’s amount. SBA 7(a) Small Loan These loans offer a maximum of $350,000. This loan is identical to the standard package, just with this smaller max amount. It shares the same collateral requirement and the same guarantee percentages at the same loan amounts. SBA Express As the name implies, the SBA express loan is delivered quickly. While other SBA loans have turnaround times between 5-10 days, the express loan has a turnaround time of just about 36 hours. This quick turnaround time comes at the cost of only a 50% guarantee by the SBA. SBA CAPLines CAPLines is an SBA program that helps small businesses reach their short-term needs. There are 4 CAPLines available: Seasonal CAPLines is used for seasonal increases of accounts receivable and inventory purposes. Contract CAPLines are used for labor and material costs. Builder’s CAPLines finance contractors. Working Capital CAPLines is for businesses that fail to meet long-term credit standards. SBA Export Working Capital These loans are for businesses that generate export sales. These loans are used to support those sales. Like standard SBA 7(a) loans, these loans can reach up to $5 million. SBA Export Express This SBA 7(a) option has a turnaround time of around 24 hours and is meant to be an efficient way for exporters to receive financial support. These loans present a $500,000 limit. SBA Veterans Advantage This loan type is specifically for military veterans, active-duty members, or national guard members. You’ll also qualify for this type of loan if you’re married to a person in one of these groups. Any small business at least 51% owned by someone of the mentioned groups can qualify. SBA Veterans Advantage loans come with reduced fees and better rates to support these groups! Comparison Chart for SBA 7(a) Loans SBA 7(a) Loan Type Max Loan Amount Max SBA Guarantee Interest rate Turnaround time Additional Information SBA 7(a) Standard $5M 85% up to $150K  75% for loans exceeding $150K  Negotiable, cannot exceed max set by SBA 5-10 business days N/A SBA 7(a) Small $350K 85% up to $150K  75% for loans exceeding $150K Negotiable, cannot exceed max set by SBA 5-10 business days N/A SBA Express $500K 50%  Negotiable, cannot exceed the maximum set by SBA Max 36 hours N/A CAPLInes $5M 85% up to $150K  75% for loans exceeding $150K Negotiable, cannot exceed max set by SBA 5-10 business days 4 different types Rates, loan amounts, and specific guarantee percentages will vary based on the type SBA Export Working Capital $5M 90% – varies with other factors and value of a loan  Negotiable, no set SBA limit  5-10 business days N/A SBA Export Express $500K 90% up to $350K 75% for loans exceeding $350K Negotiable, cannot exceed max set by SBA Max 24 hours N/A  SBA Veterans Advantage $5M 85% up to $150K  75% for loans exceeding $150K Negotiable, cannot exceed max set by SBA 5-10 days At least 51% of businesses owned by Veteran or related group  Certain fees waived  How to qualify for an SBA 7(a) Loans An SBA 7(a) loan requires a few qualifications to ensure your eligibility for financing. Your business, first of all, needs to be registered as a for-profit business and operate in the U.S. The SBA does not provide these loans to nonprofits, political businesses, gambling businesses, life insurance companies, or passive income businesses. Your business must also be considered a “small business.” This means your business’ net worth cannot exceed $15M and an after-tax profit of $5M over two years. Contact the SBA if you’re unsure about the size of your business

Overview If you’ve ever thought about expanding your business or investing in commercial property, you’ve probably wondered how to determine the best financing options. If you’re new to investing or unfamiliar with your options, the landscape can feel daunting. The last thing you want to do is choose a financing option that shackles you with poor rates or a hectic repayment schedule. The SBA 504 loan is perfect for business owners who want to expand or purchase equipment. With great financing rates, generous amounts, and flexible repayment terms, the SBA 504 loan is an amazing choice for many business owners. In this article, we’ll explain how these loans work, how to obtain them, pay them back, and much more. Let’s dive in. SBA 504 Loans: How they work SBA 504 loans operate differently from other loans and financing options. In most cases, loans involve the borrower and the lender. By way of contrast, SBA 504 loans have three parties: the borrower, the lender, and the Certified Development Company (CDC). In this arrangement, the lender (usually a bank or credit union) will provide up to 50% of the loan, the CDC will cover up to 40%, and you, as the borrower, will cover 10%. This means SBA 504 loans will cover up to 90% of the costs of your needs! These percentages can vary from case to case, so be sure you discuss them with your loan provider. It’s important to remember that because you’re receiving money from two other parties, they’ll each have different interest rates and liens. How to get an SBA 504 Loan There are a few eligibility requirements that you should consider when applying for an SBA 504 loan. Your CDC and your lender might give you other, smaller requirements, but here are the main ones: For-Profit Business Your business must be a for-profit business based in the United States. SBA 504 loans cannot be given to nonprofits, political businesses, gambling businesses, life insurance companies, or passive income businesses. Most businesses will be eligible! You can always ask a CDC for more information if you’re unsure. Use of space for the purchased property If the loan is used to purchase property for the business, you must ensure and prove that at least 51% of the property space will be used for YOUR business. This percentage goes up to 60% if you plan to renovate or construct add-ons to an existing property. Net worth The SBA is the “Small Business Administration,” and the SBA 504 loan is to help “small” businesses. But what exactly is a small business? In this context, a small business means that the business cannot have a net worth exceeding $15 million and/or after-tax profit of more than $5 million over a two-year period. These amounts may change depending on your type of business, but these are good numbers to start with. Ask the SBA if you’re still unsure about the scale of your business! Personal Guarantees Your personal financial history and any relevant personal financial information will be submitted to the SBA, the CDC, and your lender to ensure repayment. Sometimes you’ll also need to submit a personal history statement. This summary of financial and personal information will help the loan partners decide if you are someone they can trust with paying back your loan. How to use an SBA 504 Loan While these loans have a broad reach and are available to many, there are still rules and regulations that dictate how you can spend money you receive through an SBA 504 loan. SBA 504 loans can be used for: Purchasing property for your business Construction for your business Equipment for your business Modernizing/renovating business real estate and facilities SBA 504 loans cannot be used for: Residential property or property that won’t primarily be used to conduct business operations Working capital or short term cash Consolidating debt How to apply for an SBA 504 loan Applying for an SBA 504 loan is a straightforward process. Here are the steps you will take to get an SBA 504 loan for your business. Make sure you are eligible We’ve covered eligibility in this article. Use our guidelines to make sure you and your business qualify for an SBA 504 loan! There are a few other conditions to remember, which will change from lender to lender. If you have a history of defaulting on loans, have a low credit score, or even own too many assets, you’ll find it challenging to secure an SBA 504 loan. Find your lender and/or CDC Lenders such as banks will offer SBA 504 loans. Once you arrange a meeting with a lender, they will help you connect to a CDC that has rates and payment plans that work for you! You can also start by finding a local CDC. They’ll explain their rates and regulations and connect you to a lender. Once you’re in contact with both parties, you will need to present personal and business tax return statements for the past 2-3 years and any relevant financial documents. You’ll also need to present a personal guarantee, usually in the form of a written personal guarantee statement, ensuring your reliability to pay back your loan. Visit Loanbase for an easy-to-use platform that connects you directly with lenders tailored to your unique financial needs. Application documents There are a variety of documents and forms you must submit to get your loan. You must outline what you plan to use the money for, a timeframe for how it will be used, and you’ll need to fill out application documents found on the CDC’s or SBA’s website. Because this is a loan option for businesses, make sure you have necessary business licenses, partner acknowledgments, outlined business plans, and any other business-related documents. During this stage, you will also be able to discuss financing and repayment terms. You’ll need to do this for both your lender and the CDC. Following this, you will receive a letter of intent, which outlines your terms

Overview As a business owner or as someone who one day seeks to own a business, you may find yourself in situations where your existing capital isn’t enough for you to efficiently operate or make decisions you want to make. Thankfully, multiple financing options exist for all different types of scales and purposes. Is your business low on cash? Do you need to make some tech upgrades in your office? What about a renovation on short notice? Business lines of credit can help you tackle all of these issues (and more!) without an issue. In this article, we’ll look at what business lines of credit are, how they work, how to get them, the differences between secured and unsecured business lines of credit, and much more. Let’s dive in. Business lines of credit: How they work Business lines of credit allow small businesses to borrow a flexible amount of money. These businesses then pay interest on the money they borrow. Business lines of credit operate like credit cards. You’re given a limit on the amount of money you can borrow, and you need to make sure you repay your debts on time. Unlike term loans, which are inflexible and loan fixed amounts of money, business lines of credit offer more freedom to utilize the loaned funds. For example, say you have a $15,000 limit on your business line of credit. You can use $10,000 for a big expense, like a renovation. If you pay that $10,000 back on time, you can borrow up to another $15,000. Business lines of credit are most often used to cover short-term expenses, and borrowing amounts are typically smaller than business term loans. How to qualify for a business line of credit Wondering how to get your business a line of credit? It’s not difficult at all! Here are 3 things you’ll need to qualify for a business line of credit: Credit Score and Financial History While the exact specifications vary by lender, a high credit score will make it much easier to secure a business line of credit. A minimum score of 500+ usually lets you qualify, but a higher credit score will always make it easier to secure a line of credit. Both banks and online lenders will often require that you have at least 6 months of operating your business, in addition to a set minimum annual earning (usually around $25,000). The more established your business, and the higher your credit score, the easier it will be to access business lines of credit with quality interest rates. Financial and Business Documentation Lenders need further confirmation that you will be able to make your payments on time. Aside from your credit score and the necessary capital, you’ll need to submit your business’ tax return documents, financial statements, profit-loss documents, and any lease agreements. Banks will also often ask for your projected income and expense reports, and they’ll want to know how you plan to reach your financial goals. You’ll also need to verify your business because business lines of credit are only issued to actual businesses. Banks will ask for a business certificate or license, along with corporate seals or applicable documents. If you have a business partner, he or she will also need to sign these documents or give written permission to approve your line of credit. Online lenders are often less strict about proof of your business; in fact, some will only ask for a business checking account. Every option will differ so gather all relevant documents just to be safe! Personal Financial Documents Lenders will be interested in your personal financial history, especially if your business is new or you possess a limited financial history. Most lenders will ask for the past few years (usually 3) of your income tax statements, information regarding other business investments, and potentially more. Again, it depends on the lender. If you have all this documentation, then you’re good to go! Typically the approval process takes anywhere from a few days to a week or two. Secured vs. unsecured business line of credit Depending on the lender, your business line of credit may be either secured or unsecured. But what exactly does that mean? A secured line of credit means that you, the borrower, must use your own property as collateral in the event that you don’t pay your line of credit in time. This means that the lender can seize your property or money should you default on your loans. Collateral can include things like your home, car, office supplies, or business accounts. Unsecured lines of credit do not require you to present your assets as collateral. These lines of credit pose a more significant risk to lenders and thus come with more strict qualifications for borrowers. Additionally, lenders may still require some kind of lien or personal agreement on business assets despite offering unsecured lines of credit. Make sure to discuss these terms with your lender. As always, research the lenders you’re considering. Determine whether they offer secured or unsecured loans, and pick what best suits your business’ financial situation! Business lines of credit: Best options If you’re seeking a business line of credit, you’re probably aiming towards a specific goal or utilizing it for a specific reason. There are tons of different reasons why people might consider a business line of credit—that means there are different options to consider. In this section, we’ll discuss different situations where a business line of credit might be a good move. Unsecured Many unsecured line of credit providers can help you out with your business ventures. They don’t require collateral, provide quick access to funds, and won’t charge you interest until the funds are used. Remember that almost all unsecured lines of credit come with relatively high-interest rates. Most also present specific fee structures that make it impossible for you to pay your credit line early. Secured If you have the assets to put up for collateral, consider taking out a business line of credit