Looking for a Something more than just a new JOB?
Did you know you can get a Small Business Administration loan for up to $4 million with a payback period of 5 to 25 years?
“SBA lending, including 504 financing, will be a significant and integral part of the American small business recovery effort.” says Vistage member Kurt Chilcott, CEO of CDC Small Business Finance. “It’s going to be easier and less expensive for small businesses to get loans, grow their businesses and restore jobs and create new jobs.” Chilcott’s company provides SBA loans to California, Arizona and Nevada businesses. Here are some of the details of the new SBA loans available.
How do I apply for an SBA loan?
You can apply for an SBA loan at any participating bank or commercial lender.
How much do I need to put down on an SBA loan?
Those starting or buying a business typically need to come up with a down
What are the different types of SBA loans?
7(a) guaranteed loans: Loans made through this program range from $25,000 to $2 million with maturities ranging from 5 to 25 years. The stimulus bill included a provision that allows the SBA to raise its loan guarantee to as much as 90 percent. This increase guarantee means you may qualify for a larger loan than previously. It also means that you may be able to refinance an existing higher interest loan.
SBA Express loans: These loans of up to $350,000 are backed by an SBA guarantee of 50 percent and can be approved within 24 hours.
Business stabilization loans: Created by the stimulus plan, this deferred-payment loan of up to $35,000 is available to small businesses that need money to make payments on an existing, qualifying loan for up to six months. Repayment is required 12 months after the loan is fully disbursed. This loan can help a small business pay back other creditors, buy inventory, or get through a tight period.
Patriot Express loans: Loans of up to $500,000 are available to veteran and members of the military community.
Microloan program: Small-scale financing of $500 to $35,000 are bundled with technical assistance.
Export working capital loans: Loans of up to $1.5 million to finance export sales.
Can I refinance an existing bank loan with an SBA loan?
Yes. The stimulus plan gives the SBA the power to refinance existing loans (both SBA and non-SBA loans) for fixed assets. For more information on refinancing your existing SBA loan, contact your bank or lender.
What are the interest rates on SBA loans?
SBA sets a maximum interest rate on its guaranteed loans.
Prime plus 2.25% for loans under 7 years
Prime plus 2.75% for loans over 7 years
The SBA-504 rate for March (thru April 6) is 5.6% for a 20-year loan.
Additionally, lenders have the option of charging an additional 1 percent on loans under $50,000 and 2 percent on loans under $25,000. Also, the SBA can charge a fee from .25 percent to 3.5 percent, depending on the size of the loan.
Can the SBA help me obtain a bond?
The SBA helps companies obtain bid, performance and payment bonds. The stimulus bill recently raised the maximum contract amount that can be covered by an SBA-guaranteed surety bond from $2 million to $5 million, and, under certain circumstances, up to $10 million. Many small businesses need surety bonds in order to bid on and obtain federal and municipal contracts. SBA guarantees surety bonds to small businesses that private surety companies often are not able to extend.
Are there any drawbacks to getting an SBA loan?
Yes. The SBA typically requires that you put up both business assets and personal assets (such as your house) as collateral against the loan. If your company is unable to pay back the loan, then you will be required to pay the loan back out. If you cannot pay the loan, the SBA may go after your house or other assets.
Is there a deadline to apply for these loans?
I have more questions. How can I contact the SBA office in my area?
If your bank or lender can’t answer your questions, you can contact your local SBA office. Find your local SBA office here.