SBA 7(a) Loan:
Purpose: SBA 7(a) loans are the most common and versatile SBA financing option, designed to support various business needs such as working capital, equipment purchase, business acquisition, and refinancing existing debt.
Loan Amount: Up to $5 million.
Repayment Term: Typically up to 10 years for working capital and general use, but up to 25 years for real estate.
Guarantee & Process: The SBA guarantees a portion of the loan, reducing risk for lenders. However, the application process can be lengthier due to SBA involvement.
Eligibility: Open to a broad spectrum of businesses meeting SBA size standards, demonstrating repayment ability, and lacking access to other financing.
Credit Requirements: Generally we are looking for 700+. Anything lower than 700 would have to have a good explanation to help lenders get comfortable.
SBA 504 Loan:
Purpose: Primarily intended for fixed assets such as buying real estate, construction, or purchasing major equipment.
Loan Amount: Generally up to $5.5 million for standard projects, while green energy or manufacturing projects might qualify for more.
Repayment Term: Up to 25 years for real estate, with a 10-20 year term for equipment.
Eligibility: Businesses seeking to invest in tangible assets and create jobs or promote specific public policy goals, meeting certain job creation or public policy targets.
Guarantee & Process: The SBA provides a direct or secondary guarantee, involving a more complex approval process due to the project specifics and multiple parties involved.
Credit Requirements: Generally we are looking for 700+. Anything lower than 700 would have to have a good explanation to help lenders get comfortable.
SBA Express Loan:
Purpose: Designed for quicker access to smaller loan amounts for working capital, inventory, or short-term needs.
Loan Amount: Up to $150,000.
Repayment Term: Similar to SBA 7(a) loans with flexible terms, generally 10 years.
Guarantee & Process: The SBA provides a 85% guarantee, encouraging
lenders to offer quicker approval and funding, usually within 10-12
Business days.
Eligibility: Geared towards businesses needing rapid funding with a
simplified application process, maintaining similar standards as SBA 7(a)
loans but with faster processing.
Credit Requirements: Express loans have tighter credit requirements.
Banking partners are looking for 700 + Fico.
In summary, the main differences among these SBA loan programs lie in their purposes, maximum loan amounts, repayment terms, eligibility criteria, and processing times. SBA 7(a) provides more flexibility with use of funds, while SBA 504 is tailored for fixed asset purchases with a longer repayment period. SBA Express, on the other hand, caters to smaller, more immediate funding needs with a streamlined process and lower loan amounts. Each program targets different business needs and scales, allowing businesses to choose based on their specific requirements.
