Answers to your questions about Small Business Administration (SBA) loans and how to get one.

What is an SBA loan?

First, let’s talk about the role of the U.S. Small Business Administration (SBA) itself. The SBA is a federal agency that was created in 1953. Its purpose is to help Americans start, build and grow businesses.

To support American small businesses, the SBA administers a multi-purpose business loan program as a deferred participant where they guarantee a portion of the loan made by financial institutions like Consumers, other credit unions and banks. The SBA’s role is to lower financial risks for lenders by guaranteeing that up to 90% of the debt will be repaid.

Now, let’s cover the loans themselves. SBA loans are attractive because they offer long-term financing options at low rates. Loan periods are five to 25 years and down payments are typically just 10%. Plus, SBA loans have the flexibility to be used for most business purposes.

How much can I borrow?

Depending on the loan program, small business owners can borrow any amount from just a few thousand dollars to $5.5 million. Here are a few examples:

• Microloans, available up to $50,000 may be used for working capital, supplies, machinery, equipment and fixtures. However, loans from this program cannot be used for real estate.
• Proceeds from 7(a) Loans can be used for a broader range of uses, including expansion, new construction, the purchase of land or buildings, lease-hold improvements, working capital, refinancing debt, as a line of credit or purchasing inventory. Borrowers can access up to $5 million under this program.
• SBA Express loans of up to $350,000 are designed specifically to be used as a revolving line of credit. There is a similar program, SBA Veterans Advantage, designed for veterans, some active duty members, and reservists and National Guard members.

There are 11 SBA loan programs altogether. To explore which one might be for you, click here. (Please note: Consumers only participates in 7(a) and 504 SBA loan types.)

Who qualifies for SBA loans?

SBA loans are designed for U.S.-based, for-profit businesses. Every year, numerous SBA loans are approved for restaurants, medical offices, beauty salons, gas stations, general contractors, landscaping services, trucking firms and more.

Certain industries are barred from receiving SBA loans, such as loan packaging and political lobbying.

Requirements for an SBA loan

In addition to filling out a loan application, borrowers will have to document their cash flow to prove they are able to repay the loan. They will be asked to supply tax returns (business and personal), profit and loss statements, bank statements, balance sheets, and any other documents the lender deems necessary.

SBA loans also require that:

• the applicant has been in business for at least two years
• the applicant has a credit score of 620 or higher
• the business has at least $100,000 in annual revenue

How do I get an SBA loan?

You can apply for an SBA loan at any Consumers office. One of our commercial loan officers will walk you through every step. We’ve helped local business owners get SBA loans that allow them to start, build or expand their operations.

All loans subject to approval. Rates, terms and conditions are subject to change and may vary based on credit worthiness, qualifications and collateral conditions. Federally insured by NCUA.