Are you interested in getting an SBA loan for your business? It can be challenging to walk into a bank and get approved, given the complexity of the application process. But you have options.
Consider a small business loan marketplace, like Lendio, to lend a helping hand. It lets you view potential matches from its network of over 75 reputable lenders, including Bank of America, Chase, American Express, LendingClub, On Deck Capital, Fundbox, PayPal and Funding Circle. And suppose an SBA loan doesn’t quite work out. In that case, you can also explore over 10 other funding options to secure the capital your business needs to expand and thrive.
Wondering what makes Lendio the right choice to search for a loan? Not only is it accredited by the Better Business Bureau (BBB) with an A+ rating, but the platform is rated by Forbes Advisor as one of the top lender comparison sites. Lendio has also helped initiate funding for over 300,000 small business loans, which amounts to more than $12 billion in total funding.
Government-backed Small Business Financing
What is an SBA Loan?
SBA loans are backed by the U.S. Small Business Administration (SBA), a federal agency designed to help fund small businesses. Loans are originated by SBA-approved lenders, and a percentage of the loan amount is guaranteed by the federal agency. However, the SBA creates the guidelines that lenders must abide by when originating these loans.
Types of SBA Loans
SBA 7(a) Loan
The SBA 7(a) Loan is commonly used to cover land acquisition and construction costs, purchase or expand an existing business, refinance debt or purchase materials, furniture, supplies and machinery.
SBA 504 Loan
The SBA 504 Loan funds qualifying projects, which could include:
- the purchase or renovation of an existing building, facility or land
- the purchase of a new facility
- the purchase of long-term machinery
- land improvements.
Small businesses can also use SBA 504 loans to refinance debt related to business renovations and expansion. Upon approval, the lender releases 50 percent of the costs, and the SBA provides funding for an additional 40 percent. The remaining 10 percent of project costs is the borrower’s responsibility. Your business net worth should be under $15 million, and you’ll need an average net income that doesn’t exceed $5 million for the past two years to qualify for funding.
SBA Express Loan
SBA Express Loans cater to small businesses that need working capital sooner than later. In most instances, loan applications are reviewed in just 36 hours, if not sooner, to reach a lending decision. However, you likely won’t receive funding for at least 30 days.
Small business owners have two options to use the loan proceeds:
- Working capital with a term that spans 5 to 10 years
- Line of credit that comes with a 7-year term
- Commercial real estate loan with a 25-year loan term
What Are The Typical Terms of an SBA Loan?
Most SBA loans generally come with loan terms between 10 and 30 years.
Fees and Interest
Fees vary by loan product and lender, but the interest rates are very competitive.
The loan amount depends on the product you select:
- SBA 7(a) Loan: up to $5 million
- SBA 504 Loan: up to $5 million
- SBA Express Loan: up to $350,000
Quick note: Collateral may be required for SBA 7(a) Loans and SBA Express Loans over $25,000.
Government-backed Small Business Financing
How to Qualify for an SBA Loan
SBA loans typically have less stringent qualification criteria than traditional bank loans. Still, the application process can be challenging to navigate. These loan products call for more paperwork and an extensive review process.
The good news is Lendio can help streamline the application process with its user-friendly dashboard and digital upload capabilities.
How to Apply for an SBA Loan with Lendio
When you’re ready to apply for an SBA loan, visit Lendio’s website to get started. But first, you want to gather the following documents as you’ll need them to complete the application:
- Two years of personal and business tax returns
- A year-to-date profit and loss statement
- A year-to-date balance sheet
- A current schedule of debts for your business
Once you have these documents handy, here’s what to do next:
- Step 1: Complete the online application through the borrower portal free of charge without impacting your credit score. You’ll be asked to provide your business start date, identifying personal information and business information, and business documents.
- Step 2: If there’s a match, Lendio will present you with loan options from its network of lenders.
- Step 3: Submit any additional documentation and provide the lender with the necessary information to finalize your loan application.
- Step 4: Get approved and wait for the funds to arrive in your bank account.
What Other Business Loan Options Do You Have?
If you don’t qualify for an SBA loan, Lendio may be able to help you find another option that works for your business. Its lending partners also offer these financing products: