Unsecured Loans

SBA business loans are loans are for small qualified businesses which may not be eligible for business loans through normal channels. The SBA which helps Americans start, build and grow businesses does not directly loan money for SBA business loans. Instead, the SBA simply approves or guarantees the loan. Though an extensive network of field offices and partnerships with public and private organizations, SBA business loans are available throughout the United States Puerto Rico, the U.S. Virgin Islands and Guam.

Getting started with you own business is hard work and knowing where and how to get an SBA business loan can be one of the most important decisions that you have to make. You’ve decided you are ready to run your own small business. You’ve done your homework, have a business plan, know why unsuccessful small businesses fail and have sworn not to make those mistakes. Now you’re shopping for an SBA business loan to finance your business. The big question is, what will you need to show the lender? Even though SBA business loan qualifying standards are more flexible than other types of loans, lenders will generally ask for certain information before deciding to use an SBA loan program, or an alternative loan program. Generally, according to the SBA, a business will need the following documentation to evaluate your SBA business loan request:

Business Profile. A document describing type of business, annual sales, number of employees, length of time in business and ownership.

Loan Request. A description of how your SBA business loan will be used. Should include purpose, amount and type of SBA business loan.

Collateral. Description of collateral offered to secure the SBA business loan, including equity in the business, borrowed funds and available cash.

Business Financial Statements. Complete financial statements for the past three years and current interim financial statements.

Personal Financial Statements. Statements of owners, partners, officers and stockholders owning 20% or more of the business.

The strength and accuracy of your financial statements will be the primary basis for the approval of your SBA business loan so be sure that yours are carefully prepared and up-to-date.

A few of the SBA business loan programs available are:

Basic 7(a) Loan Guaranty
Is the primary SBA 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.

Certified Development Company (CDC), a 504 Loan Program
This SBA business loan program 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.

Microloan, a 7(m) Loan Program
SBA business loan that provides short-term loans of up to $35,000 to small businesses and not-for-profit child-care centers for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to purchase real estate.

If you’re interested in learning more about the SBA and the various SBA business loans available, you can visit their website at www.sba.gov/index.html

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