The Small Business Administration helps companies get financing with favorable rates and terms to support their growth.
What Is an SBA Loan?
An SBA loan for small businesses has a unique structure. You apply for a loan through a bank or credit union. These private lenders issue the funds, and the federal government backs them. A federal loan guarantee means the SBA will pay the lender 50% to 80% of the remaining balance if you default on your loan. You remain obligated for the entire amount, but it minimizes the financial institution’s risk.
This reduced risk enables banks to offer you better rates, terms, and decreased down payment amounts. At DCV, we help make the process easy, so you can secure the financing you need. Contact us to start on the path to flexible funding.
SBA Loan Changes: Fall 2021
In October 2021, many temporary changes to SBA loan programs expired, including:
- There are no longer Paycheck Protection Program loans.
- The limit for an SBA Express loan is now $500,000.
- Loan guarantees now have a maximum of 50% for SBA Express loans.
- SBA 7(a) loan guarantees are now 85% for borrowed amounts up to $150,000 and 75% for funds more than $150,000.
The COVID-19 Economic Injury Disaster Loan is a specific federal program that helps small businesses recover from the economic impacts of COVID-19. The SBA implemented various changes to these loans in the fall of 2021:
- Borrowers now have extended repayment terms and can begin payments two years following the loan origination.
- Businesses have expanded use options for the available funds. Borrowers can use the money to cover operating expenses, purchase equipment, or pay debts, including federal business liabilities and commercial debt prepayments.
- The SBA increased the loan limits from $500,000 to $2 million.
If your operation is suffering due to COVID-19 or other reasons, we can help you find solutions.
Benefits of SBA Loans
At DCV, our experience and expertise help you access the best financing solutions for your needs. There are many advantages to securing financing from the SBA:
- Extended terms: You have more time to repay the amount you borrow. Your loan term depends on how you plan to use the funds, typically ranging from 7 to 25 years.
- Competitive rates: Lenders determine SBA loan interest rates on the prime rate plus the allowable spread. The annual percentage rate is significantly lower with an SBA loan than with a traditional loan.
- Reduced fees: Each year, the SBA reassesses its fee structure for loans. The costs typically include a yearly service fee and an upfront guarantee payment.
If you need help getting SBA financing, reach out to us today at 805-449-2411!
Why Choose DCV Franchise Group
Our skilled specialists have the skills to secure SBA funding. We understand the process and can help you get the capital you need.
Financing & Corporate Services
For over 30 years, Reg has worked in business finance, guiding corporations and entrepreneurs through all aspects of business development. The scope of our work ranges from mom-and-pop family businesses, mid-sized companies, Fortune 500 hotel development projects, acquisitions, and dispositions. We are experts in securing SBA financing for small businesses. DCV Franchise Group has placed nearly $2.5 billion with traditional lenders using SBA products, commercial lending, and leasing. DCV is an SBA financing expert. We often hear: “If anyone can do it, DCV can!”
How to Apply for an SBA Loan
Ensure Your Business Is Eligible
If your operation is struggling financially, you likely will not qualify for an SBA loan. You need a good business credit score, a minimum of two years in business, and solid revenue. Religious institutions and charitable organizations are not eligible for SBA funding.
Prepare Your Application Documents
To apply, you need various documents, including a borrower information form, your business and personal tax returns, a personal financial statement, and a cash-flow projection for the coming year.
Choose a Lender
Look for lenders that have experience with SBA loans. Consider the financial institution’s track record of SBA loans and the relevant experience of their staff. The program offers an online tool to help you find the right bank.
Wait for Approval
Approval time varies depending on the lender. It typically takes two to three months. If you need money right away, you can apply for an SBA Express loan. This type of loan offers a maximum of $500,000, and the SBA can respond to your application within 36 hours. After approval, your bank closes the loan and dispenses the funds.
What To Expect From Service
The SBA offers many kinds of loans, depending on your intended use. Each type has unique conditions and terms:
- SBA Express loans: Quick funding option up to $500,000 for growth opportunities, working capital, or equipment purchases.
- SBA Microloans: Smaller loans in amounts up to $50,000 for supplies, inventory, machinery, or working capital needs.
- SBA Community Advantage loans: Funds up to $250,000 for normal business use.
- SBA 7(a) loans: Financing in amounts up to $5million for operational capital, equipment purchases, and expansion costs.
- SBA 504 loans: Funding up to $5.5 million for purchasing real estate, machinery, or land.
- SBA Disaster loans: Financing up to $2 million to pay for expenses resulting from a declared disaster.
- SBA Export Express loans: Fast funding up to $500,000 for a company’s export development.
- SBA Export Working Capital loans: Up to $5 million in funds to support a business’s export sales.
- SBA International Trade loans: Financing up to $5 million for long-term needs related to an organization’s export operation.
SBA loan programs offer many advantages over traditional loans to help you maintain growth and ensure success. AT DCV Franchise Group, our team of experts knows how to obtain the financing you need. Get in touch with us today to find out how we can make getting a loan easier.