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    You’re a small business owner looking to take out an SBA loan. But with so many different loan options available, it can be tough to know which one is right for you. To help you make the best decision for your business, we’ve compiled some clients’ questions and answered them below. 

    What are the SBA loan guidelines?

    To be eligible for the SBA 7(a) loan, you must meet several preliminary requirements. Your company must be officially registered as a for-profit business that wishes to do business in the United States or its possessions. You’ve got to have a reasonable amount of invested equity and be small, as defined by SBA.

    The SBA also likes to see that you’ve invested personal assets in the business, proving your commitment to being vested and successful. Last but not least, don’t be delinquent on any U.S. government debt.

    What is the most popular type of SBA loan?

    The most common type of SBA loan is the 7(a) program which can be used for both short-term and long-term financing. It can also be used to purchase real estate.

    What is the most accessible SBA loan to get?

    Are you looking for an easy SBA loan? Try microloans! This product gets its name from the size of the average SBA Loan. You can access up to $50K. Interest rates range from 8% to 13%. SBA’s Microloan product also carries no fees.

    Can you apply for an SBA loan twice?

    It’s possible, but your lender might have policies that dictate how often you can apply for a specific type of business funding. Talk to them to find out more about those limits and other essential details related to this question.

    How does the SBA 7a loan work?

    The SBA 7a loan is a fully amortized loan with a fixed rate and term, similar to a home mortgage. The maximum loan amount for a 7(a) loan is $5 million.

    What are typical SBA loan terms?

    If the loan includes a real-estate construction or purchase transaction, the terms can go out as much as twenty-five years. If the loan purpose is working capital, the terms can go to 7 years. 

    What is a 7a lender?

    An SBA 7a lender is a lender that is authorized to originate loans with an SBA guarantee. 

    Are SBA 7a loans secured?

    The SBA offers 7(a) loans for business owners to help with their operations. These types of secured lending programs require that you put up collateral if the loan is more than $350K.  

    How hard is it to get an SBA 7a loan?

    Getting an SBA loan can be a challenge. But with good personal credit and healthy financials, you’ll stand a good chance of getting an excellent loan for your business. 

    Do you need a business bank account for an SBA loan?

    Yes, the SBA will require separate bank accounts for your business and personal finances.

    Can you use your home as collateral for an SBA loan?

    There are some cases where you can use your home as collateral for an SBA loan. If your equity is more than 25% of your home’s worth, the SBA lender can use that equity toward the collateral.    

    Can I sell my house if I have an SBA loan?

    The SBA will allow you to sell your home so long as any proceeds from the sale of the house go towards paying off your debt with the SBA first before and remaining funds go to you. 

    How do small businesses get money from the government for free?

    The federal government provides many resources for small businesses that want to start or grow their company. The SBIR and STTR programs offer grants, so you don’t have to pay them back.

    Do you have to pay SBA loans back?

    Yes, you must pay back your SBA loan according to the terms in your loan agreement.

    Will SBA loans be forgiven?

    The SBA will not forgive 100% of what you owe, but they do have the room to make a compromise. If the compromise is approved, your loan will be classified as “Compromised/Closed” instead of something more derogatory on your credit report.  

    What happens to an SBA loan if a business is sold?

    If you want to sell your business, but the balance on your SBA loan is more than what it’s worth, you can apply for a short sale where you will use 100% of the proceeds of the sale of your business as payment for your loan. 

    Does the SBA grant need to be paid back?

    The SBA does not require repayment for grants it gives. The very nature of a grant is used for research or innovation.

    Can you purchase a business with an SBA loan?

    The SBA 7(a) loan is designed for those who want to buy an existing business. With this type of financing, you can purchase a business and the real estate it occupies in one transaction. 

    Can you spend an SBA loan on anything?

    SBA loans can provide you with a quick and easy way to get the funds your business needs for any purchase, whether new equipment or working capital.

    What are you allowed to use your SBA loan for?

    Like many small business owners, your SBA loan is for the operation and growth of your company. It cannot be used towards personal debt such as credit cards or other obligations.

    Can you use an SBA loan to pay back taxes?

    The SBA states that COVID-19 EIDL funds may be used to pay a federal tax debt. But regular EIDL funds cannot be used to pay any tax debts.  

    Can I use an SBA loan to buy stocks?

    No. Funding from the SBA is to be used for business purposes only and not for personal endeavors like stock trading. 

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    Written by

    United Capital Source

    United Capital Source has been helping small business owners find the working capital they need to grow their businesses since 2011. Your business is our only business!

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