Sba Loans - The Ultimate Guide
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Sba Loans - The Ultimate Guide

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In today’s presentation we are going guide you through all about SBA loans. So let’s get started!

In today’s presentation we are going guide you through all about SBA loans. So let’s get started!

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Sba Loans - The Ultimate Guide Presentation Transcript

  • 1. SBA Loans The Ultimate Guide by FitSmallBusiness.com
  • 2. The sets the guidelines for the approval of loans and guarantees part of their repayment.
  • 3. The sets the guidelines for the approval of loans and guarantees part of their repayment. This guarantee lowers the risk for SBA lending partners which include banks, community development organizations, and micro-lending institutions.
  • 4. SBA loans often have:
  • 5. SBA loans often have: • Lower interest rates.
  • 6. SBA loans • Lower interest rates. often have: • Longer repayment periods.
  • 7. SBA loans • Lower interest rates. often have: • Longer repayment periods. • And other more favorable terms than non-SBA loans.
  • 8. The Personal Guarantee
  • 9. The Personal Guarantee All SBA loans require personal guarantees for every owner of at least 20% of the business
  • 10. Your home may be included as collateral
  • 11. Your home may be included as collateral But this depends on the value of the assets already pledged as collateral and the size of the loan.
  • 12. The May require a professional appraisal of both your business and personal assets.
  • 13. The May require a professional appraisal of both your business and personal assets. For more information on SBA loan collateral and the personal guarantee, see this page.
  • 14. SBA loans Types: • The 7a General Small Business Loan • The 7a SBA Express • The CDC/504 Real Estate and Equipment Loan • Disaster Loans
  • 15. SBA loans Types: • The 7a General Small Business Loan • The 7a SBA Express • The CDC/504 Real Estate and Equipment Loan • Disaster Loans These loan programs have different purposes and terms, which this guide will explore in order to help you understand which SBA loan is best for you and your small business.
  • 16. The 7a General Small Business Loan
  • 17. The 7a General Small Business Loan Is appropriate for most types of business. One well known use of a 7a loan is for the purchase of a franchise.
  • 18. 7a Loans Can also be used for a wide range of other purposes.
  • 19. 7a Loans Can also be used for a wide range of other purposes. • Long or short-term working capital • Purchase equipment and real estate • Construction • Business acquisition • Refinancing
  • 20. There is no minimum loan amount for the 7a, and the maximum is $5 million.
  • 21. The 7a SBA EXpress
  • 22. The 7a SBA EXpress Guarantees a response to an application within 36 hours.
  • 23. The 7a SBA EXpress Guarantees a response to an application within 36 hours. Follows the same guidelines as the standard 7a but the maximum loan amount is $350,000.
  • 24. There is no defined interest rate On 7a loan, since the actual interest rate is negotiated between the applicant and lender, subject to an SBA maximum.
  • 25. There is no defined interest rate On 7a loan, since the actual interest rate is negotiated between the applicant and lender, subject to an SBA maximum. The maximum interest rate is likely to be several percentage points lower than an equivalent non-SBA loan.
  • 26. Maximum interest rates that you would pay based on the prime rate at the time this presentation was written. Less Than $25K Loans With Terms Under 7 Year Loans With Terms of 7 Years or Greater $25k - 50K Over $50K 3.25% (base rate) + 4.25% (markup)= 3.25% + 3.25% = 3.25% + 2.25% = 7.5% 6.5% 5.5% 3.25% + 4.75% = 3.25% + 3.75% = 3.25% + 3.75% = 9.0% 8.0% 7.0%
  • 27. The 7a SBA Qualifications According to the SBA, in order to be eligible for a 7a loan your businesses must:
  • 28. The 7a SBA Qualifications • Have reasonable invested equity. •Use the funds for a sound business purpose.
  • 29. The 7a SBA Qualifications • Use alternative financial resources, including personal assets, before seeking financial assistance.
  • 30. The 7a SBA Qualifications •Be able to demonstrate a need for the loan proceeds. •Not be delinquent on any existing debt obligations to the U.S. government.
  • 31. The 7a SBA Qualifications •Be able to demonstrate a For comprehensive eligibility information, go here. need for the loan proceeds. •Not be delinquent on any existing debt obligations to the U.S. government.
  • 32. CDC/504 Loan Real Estate and Equipment The
  • 33. CDC/504 Loan Real Estate and Equipment The Is a more specialized form of SBA loan designed specifically for large capital investments in equipment and property.
  • 34. CDC/504 Loan Real Estate and Equipment The Can be used to purchase land, make improvements to existing facilities, construct new facilities, and purchase long-term machinery and equipment.
  • 35. CDC/504 Loan Real Estate and Equipment The (for a comprehensive list of 7a loan uses, see this article). Can be used to purchase land, make improvements to existing facilities, construct new facilities, and purchase long-term machinery and equipment.
  • 36. The maximum loan amount for a CDC/504 loan ranges between $4-5.5 million
  • 37. But the exact amount depends on how your small business plans on using the loan in relation to job creation and public policy.
  • 38. But the exact amount depends on how your small business plans on using the loan in relation to job creation and public policy. For a more detailed explanation check our main article here.
  • 39. The CDC/504 Qualifications • Have a tangible net worth less than $15 million and an average net income less than $5 million after taxes for the preceding two years.
  • 40. The CDC/504 Qualifications • Not be engaged in speculation or investment in rental real estate.
  • 41. The CDC/504 Qualifications • Not be engaged in speculation or investment in rental real estate. • Not have funds available from other sources.
  • 42. The CDC/504 Qualifications • Have the ability to repay the loan on time from the projected operating cash flow of the business
  • 43. Disaster Loans
  • 44. Disaster Loans The SBA offers a number of different disaster loans, but the two types relevant to small business owners are:
  • 45. Disaster Loans “Business Physical Disaster Loans” “Economic Injury Disaster Loans”
  • 46. You may be eligible for a Business Physical Disaster Loan If your business has been damaged by a disaster that is in a declared disaster area.
  • 47. Businesses are eligible for loans up to $2 million
  • 48. Businesses are eligible for loans up to $2 million Which can be used for the repair or replacement of real property, machinery, equipment, and inventory.
  • 49. You may be eligible for an Economic Injury Disaster Loan If your small business, small agricultural cooperative, or nonprofit organization has suffered substantial economic injury as a result of a disaster.
  • 50. Substantial economic injury Is defined as your business being “unable to meet its obligations and to pay its ordinary and necessary operating expenses.”
  • 51. These loans are up to $2 million with a maximum repayment term of 30 years.
  • 52. These loans are up to $2 million with a maximum repayment term of 30 years. For more comprehensive information on Economic Injury Disaster Loans, see this article.
  • 53. disaster loan interest rate For “Business Physical Disaster Loans” Interest rates will be less than 4 % if credit is not available elsewhere And less than 8% percent if credit is available elsewhere.
  • 54. disaster loans interest rate For “Economic Injury Disaster Loans” interest rates will be less than 4%
  • 55. And Finally...
  • 56. To learn how to simplify the process of running your business visit us at....
  • 57. www.FitsmallBusiness.com Thanks for watching Click here to tweet this presentation.