The Small Business Association (SBA) offers several loan programs to help people start new companies and expand their business. Loan applicants have a higher chance of approval when applying for SBA loans because the government agency guarantees up to 85 percent of the loan payoff to banks if a business owner cannot repay the loan. Below is a brief description of some of the most popular types of SBA loans and the estimated approval time for each.
The SBA 7 (a) loan is one of its most straightforward and popular funding options. Small business owners can obtain up to several million dollars and use the money how they see fit. This loan is a good option for new small business owners and those with existing companies who cannot obtain funding from any other source. The SBA currently offers nine separate 7(a) loan programs with an average approval time of two to three months.
The 504 loan offered by the SBA exclusively finances the purchase of equipment and real estate. The business owner applying must run a for-profit organization and meet the strict eligibility criteria of the SBA. Benefits of 504 SBA loans include a fixed interest rate, small down payment, and long-term financing options. The average approval time for an equipment and real estate loan is 30 to 45 days, although it can take up to six months to receive final approval.
SBA microloans are general purpose loans for smaller amounts, usually $50,000 or less. The typical approval time ranges from 30 to 90 days. Both the SBA and an intermediary lender must approve the loan.
This SBA loan is available to business owners who have experienced a disaster such as the recent coronavirus pandemic that has had a significant impact on the company’s ability to remain solvent. The three phases of a disaster loan include application, verification of property or disaster, and loan decision. Applicants should expect to wait approximately one month for the first two steps with funds dispersed five business days later.
Want to learn more about your options for SBA loans? Schedule an appointment with Ambition Funding Solutions today.