CREDIT
Requirements.
SBA loans are all personally guaranteed and anyone that is 21% or more owner of the business must be a guarantor. This means your personal credit must be clean without any bankruptcy, collections, or even late payments - especially in the past 3 to 4 years. Even if you have what seem to be good credit scores, you should verify a 3 bureau FICO credit report to make sure there are no surprises. mySCOREIQ provides a $1 trial for 7 days with no inquiry on your credit.
If your business is at least 1 year old, the SBA will also be looking at your business credit score, called the FICO Small Business Scoring Service (SBSS). If your personal credit is not strong enough you will need to either have business credit or build business credit to be able to qualify.
%20Loans-min.png)
SBA 7(a) Loan
Use of Funds: Working capital, debt restructure, business acquisitions, franchising, equipment, startup, payroll, marketing, expansion, lease hold improvements, commercial property, and the list goes on...
Interest Rate: Prime + 2.75% (Depending on the loan size banks can charge up to 6.5%)
Terms: Up to 10 Years
SBA 504 Loan
Use of Funds: Commercial property for owner use. Must be 51% owner occupied. Not for real estate investing. Can include land, construction, furniture, fixtures, lease improvements.
Interest Rate: Prime + 2.75% (Depending on the loan size banks can charge up to 6.5%)
Terms: Up to 25 Years
SBA Express Loan
Use of Funds: All the same use as the SBA 7(a) loan. It is an SBA 7(a) loan but only up to $500,000 and fast tracked. Very few banks participate and they create unique programs around it. Minimum 1 to 2 years in business.
Interest Rate: Prime + 2.75% (Depending on the loan size banks can charge up to 6.5%)
Terms: Up to 10 Years