SBA Loans

The U.S. Small Business Administration (SBA) is an independent Agency of the Executive Branch of the Federal Government. It is charged with the responsibility of providing four primary areas of assistance to American Small Business. These are: Advocacy, Management, Procurement, and Financial Assistance. Financial Assistance is delivered primarily through SBA’s Investment programs, Business Loan Programs, Disaster Loan Programs, and Bonding for Contractors.
The SBA offers numerous loan programs to assist small businesses. It is important to note, however, that the SBA is primarily a guarantor of loans made by private and other institutions.

PROGRAM: Basic 7(a) Loan Guaranty
FUNCTION: Serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. It is also the agency’s most flexible business loan program, since financing under this program can be guaranteed for a variety of general business purposes.
Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions). Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets.

CUSTOMER: Start-up (30% Minimum) and existing small businesses, commercial lending institutions
PROGRAM: Certified Development Company (CDC), a 504 Loan Program
FUNCTION: Provides long-term, fixed-rate financing to small businesses to acquire real estate or machinery or equipment for expansion or modernization. Typically a 504 project includes a loan secured from a private-sector lender with a senior lien, a loan secured from a CDC (funded by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost, and a contribution of at least 10 percent equity from the borrower. The maximum SBA debenture generally is $1 million (and up to $1.3 million in some cases).

CUSTOMER: Small businesses requiring “brick and mortar” financing
Not Accepted Loans: Start Up Restaurants, Start Up Hospitality, Ground Leases, Non-branded/Independent gas stations, Waste Disposal Facilities, Start Up Car Dealerships, Recreational Facilities and Car Washes
Accepted Loans: Office Condominiums, Office Warehouses, Office Buildings, C-Stores, Motels/Hotels, Restaurants, Industrial, Nursing Homes, Funeral Homes, Medical Offices, Veterinary Property, Retail


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