The Small Business Administration (SBA) is the U.S. government agency that provides various types of loans and other assistance to small businesses, the backbone of the US economy. SBA loans are by far the most popular forms of assistance offered by the agency.
Why would you consider an SBA loan? SBA loans are business loans that are guaranteed by the U.S. Small Business Administration (SBA). The SBA essentially guarantees most of the loan that is acquired through an approved SBA lender which can either be a bank or non-banking lender. This means that if the borrower is unable to repay the loan, the SBA will pay a portion of the lender’s losses.
There are two main funding programs that we at AmRock Financial offer, the SBA 7(a) loan and SBA 504:
● SBA 7(a) Loan Program: This is the SBA’s primary loan program and can be used for a variety of purposes, such as starting a new business, expanding an existing business, commercial real estate, working capital, refinancing current debt, or purchasing equipment or inventory. Loan amounts can range from $500 to $5.5 million. Terms can range from 10- 25 years for commercial real estate loans. Interest rates can range from Prime+ 2%-4% depending on the borrower’s financial history.
● SBA 504 Loan Program: This program provides long-term, fixed-rate financing for major fixed assets, such as real estate or equipment. Loan amounts can range from $125,000 to $20 million. The term for this loan is 10-20 years. The 504 loans cannot be used to buy fixed assets like commercial property or heavy equipment.
In summary, SBA loans typically have lower interest rates and longer repayment terms than conventional loans, making them an attractive option for small businesses. However, the application process for SBA loans can be more complex and time-consuming than for many other types of loans.
Contact us today at AmRock Financial for additional details on securing your business’s future with an SBA loan!