Monday, May 01, 2006

SBA's Most Popular Loan Programs

Basic 7(a) Loan Guaranty: SBA’s primary loan program to help obtain guarantees up to $1.5 million for expansion or renovation, construction of new facilities, purchase of lands, buildings, machinery, inventory, furniture, working capital. Offers a term of 7 years for working capital, 10 years for equipment and 25 for real estate/construction. Interest rates are negotiated between borrower and lender, and typically can’t exceed prime rate plus 2.75%.
504 Loan Program, (CDC): Referred to as “brick and mortar” financing, 504 offers long-term, fixed-rate financing to businesses to purchase real estate or equipment for expansion or modernization. Generally includes a loan from a private lender with a senior lien, a loan secured from a certified development company with a junior lien covering up to 40% of the total cost, and at least 10% equity contribution from the borrower.
SBA Community Express Loan Program: Fast turn-around time and easy application process. Designed to increase working capital and provide smaller business loans—$5,000 to $25,000—that most banks wouldn’t touch. No collateral is required—only a $350 processing fee. Program offers a 7-year term. Borrowers must receive a Community Express Certificate of Technical Assistance from an SBA-approved Technical Assistance Provider.
Misconceptions abound when it comes to the SBA guaranteed loans. To learn the ins and outs of the process, check out Matt Berkley's informative article. Click here to read more.


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