SBA Loans To Grow Your Small Business

Who Qualifies for SBA Loans?

For most alternative small business loan products, an applicant only has to have been in business for a minimum of 6 months and be able to provide documentation of steady sales. However, the SBA has more stringent rules. To apply for an SBA loan, your business must meet the following requirements:

• Corporation or LLC with at least 10 employees
• In business for at least 2 years
• Annual gross sales of at least $1.2 million
• US citizenship or legal permanent residency
• No bankruptcies or foreclosures within the past 3 years
• No defaults on government-backed loans
• No outstanding tax liens
• No outstanding collection accounts

Don’t fit the criteria? Don’t worry. We have plenty of other business financing options that can fit your needs. Take a look at your other business loan options. If you’re not sure which option you need, feel free to give us a call.

How to Apply for SBA Loans

Once you’ve made sure that you fit the above criteria, you’re ready to apply. Here are the steps you’ll need to take to ensure a smooth loan process.

Gather Your Documents

While most alternative business loans require few documents, SBA loans work a bit differently. The SBA itself set the rules and regulations for these business loans. To apply for an SBA loan, you’ll need the following documents:

• Driver’s License
• Voided Business Check
• Bank Statements
• Credit Report
• Business Tax Returns
• Credit Card Processing Statements
• Personal Tax Returns – 3 Years
• Business Tax Returns – 3 Years
• Personal Financial Statement
• List of Real Estate Owned
• Debt Schedule
• Current P&L and Balance Sheet Year-to-Date
• A/R and A/P Reports
• First Down Funding 1 Page Application

Once you’ve gathered your documents, you’re ready for the next step.

Apply With First Down Funding

After all of that work, you’ll be glad to find that your next step is easy. Simply apply online through First Down Funding. You can also give us a call to go over any questions you may have.

How Do SBA Loans Work?

Like we said, banks have some pretty strict requirements. They want to loan money to borrowers who come with the least amount of risk. If the SBA hadn’t gotten involved, banks would only loan money to a select few people who meet their very specific requirements.

What is the SBA?

SBA stands for the Small Business Administration, a US federal government agency. They offer all sorts of small business help, but they’re most famous for their business loan help. The SBA helps small business owners obtain loans from banks and other credit organizations. While many people believe that the SBA provides the money for those loans, the truth is that the SBA simply guarantees those loans up to 85%. In other words, if the borrower defaults on the business loan, then the SBA pays 85% of that loan back to the bank. This way, banks can take on “riskier” loan seekers. Still, as you’ve noticed from reading this page, obtaining an SBA loan requires a lot of time and attention.

Where FDF Comes In

Now, First Down Funding works differently than the banks. We have a partnership with SBA lenders, creating a “marketplace” atmosphere. As a result, our SBA loans are often much easier to qualify for than they are through other sources.

Are SBA Loans Hard to Get?

SBA loans are harder to get than your average loan. With long repayment terms, and low interest rates (and of course, having the government back you in case you can’t make repayment), there are plenty of business owners who want this option, which means a lot of competition. The application process is longer and more rigorous than others, and the eligibility requirements are more extensive than other loan options as well – business owners might even mold their product to fit the necessary specifications, just to get this loan.

All in all, it’s important to know everything it takes to get an SBA loan. It’s never too early to speak with First Down Funding to further discuss if an SBA loan is the right fit for you.

How Much Do SBA Loans Cost?

SBA loans have some of the lowest costs available, which is why so many small business owners seek them. Just like with any other business loan, your costs will vary depending on your credit score, your loan length, etc. First Down Funding clients often get better rates on business loans than they would from other lenders. Our marketplace SBA loans start at just 5%. Most lenders start their SBA loans at more than 7%. The lower costs at FDF come from the “marketplace” atmosphere that we described above.

SBA Quick Reference Chart

Note 1: SBA specifies the amount of certain fees each fiscal year for all loans approved during that year.

Note 2: For example, the guaranty fee on a $100,000 loan with an 85% guaranty would be 2% of $85,000 or $1,700, of which the Lender may return $425.

Note 3: For example, the guaranty fee on a $5,000,000 loan with a 75% guaranty ($3.75 million guaranteed portion) would be 3.5% of $1,000,000 ($35,000) PLUS 3.75% of $2,750,000 ($103,125), which totals $138,125.

You can contact us anytime for help calculating your loan payments, or if you have any other questions.