FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
BEING WELL-PREPARED WILL MAKE
THE SBA LOAN APPLICATION EASIER
When it comes to small business lending,
Small Business Administration loans
are hot. In fact, in fiscal year 2019, the
SBA guaranteed more than $28 billion to
entrepreneurs that otherwise would not
have had access to capital to start, grow
or expand their small businesses. Business
loan approval, in general, is the highest it’s
SBA loans appeal to entrepreneurs
because they tend to have longer payment
terms and lower interest rates than many
other types of business financing and loans.
But, like any low-cost business loan, getting
an SBA loan can seem overwhelming. Don’t
let it be.
“The biggest misconception is that
there’s a lot of paperwork, but this is just a
regular business loan,” says Bob Coleman,
publisher of The Coleman Report, a leading
SBA intelligence report for lenders. “The
bank deals with the government, not the
Here are five things you should know to
help land one of these coveted loans.
1. Do Your Homework
The more you know about your financial
situation i.e. your credit history, credit
scores, risk factors as well as your industry
and competition, the better-positioned you
will be to apply for — and get approved for
— that SBA loan.
Dr. Kathryn Primm, owner/veterinarian
of Applebrook Animal Hospital, took out an
SBA loan to remodel a residence and equip
it as a functional animal clinic.
“I did a lot of demographics studies myself
before even applying,” she says. “I knew
it was a low-risk loan because I know what
a hard worker I am, and I know what a good
veterinarian I am. The area was able to support
a veterinary hospital as well, according
to my research.”
Primm was able to pay off her loan in five
“The SBA was like my behind-the-scenes
investor and I bought them out,” she says.
It’s also helpful to understand how SBA
loans work and applicants should familiarize
themselves with the basic requirements.
The SBA doesn’t make loans; it guarantees
them. Each lender must meet the SBA’s
minimum requirements, but beyond that
the lender may have its own requirements
as long as it doesn’t discriminate on a prohibited
2. Know How Much You Need
There are several different SBA loan
programs, each with specific uses. The 504
loan is for land, building and renovation, for
example, while Export Express loans help
small businesses develop or expand their
export markets with streamlined financing.
The most popular, by far, is the 7(a) loan
program, which allows you to borrow up to
$5 million with a 10-year repayment period
loans for equipment or real estate may be
extended to 25 years.
Maximum SBA Loan Amounts
Up to $5 Million: 7(a), CapLines, Export
Working Capital Program, International
Trade, 504 loans*
Up to $2 Million: Disaster loans
Up to $500,000: Export Express loans
Up to $350,000: 7(a) Small Loans
Up to $1 million: SBA Express loans SBA
Express loan limits have been raised to $1
million through the end of 2020.
Up to $250,000: Community Advantage
Up to $50,000: Microloans
*Note: There is no project size limit for
504 loans, but the maximum SBA debenture
loan amount is generally $5 million.
Certain small manufacturers or energy
projects may qualify for up to $5.5 million.
If you haven’t already, write out a budget
for what you’ll do with the money if you
secure a loan. Not only will this help you
really dive into understanding how that
money can best benefit your business, but
it may also come in handy when talking to
a lender who, naturally, will want to know
you have a plan for the funds.
3. Know Your Numbers
Good credit and solid financials are often
key to getting an SBA loan. Chester Gordon
is president of M.A.C.-Tech Fabrication and
Repairs Inc. in Queens, New York, a custom
fabricating shop specializing in architectural
metals and finishes. He recently closed
on his second SBA 504 loan.
The first loan allowed him to purchase
the building where he operates. The second
allowed him to expand by building a
second adjacent building and doubling the
square footage of the enclosed space. He
says his SBA loans “gave me the capability
of expanding.” In addition to the physical
space, the financing allowed him to hire
more employees and to grow his business.
When it comes to the application process,
Gordon recommends that applicants
keep their credit in good standing because
the SBA is very thorough. He says his loans
required three years of financials, so he’s
very methodical in his approach to keeping
his financial information organized, relying
on his accountant, his office manager and
his wife, who works in the business and
handles administrative duties.
The SBA generally doesn’t have a minimum
personal credit score requirement,
but individual lenders may. In addition,
certain SBA loans — 7(a) loans up to
$350,000 and Community Advantage loans
— require lenders to prescreen applications
using the FICO SBSS score. This score
can take into account the owner’s personal >>
BY GERRI DETWEILER
Gerri Detweiler is a leading nationallyrecognized
financing and credit expert with
more than 20 years of experience. During the
2008/2009 financial crisis, Detweiler was interviewed
hundreds of times, providing insightful
expertise and actionable advice for traversing
the turbulent landscape and unknown change.
Today, she is education director at Nav, the
trusted financial partner of more than 1.2 million
businesses, where she gives Nav’s customers
certainty in an uncertain world through
expertise and actionable advice.