SBA Loans: What to Expect

Many entrepreneurs have heard of the loans offered through the Small Business Administration, but many aren’t exactly sure what to expect from this funding source or how to secure their own SBA Loan to buy a business or open a franchise.

Below are a few basics to help you better understand SBA loan rates and how an SBA loan can help with business funding or franchise funding.

The Basics of SBA Loans

SBA Loans are secured by the Small Business Administration and issued by third party lenders. Banks and financial institutions are more willing to provide funding to small business owners through SBA Loans because the SBA backing offers additional security in the event of a loan default. To apply for an SBA Loan, business owners must:

  • Determine which type of SBA Loan is best for their business
  • Determine eligibility
  • Find a lender that provides SBA Loans
  • Compile the applicable documents and paperwork
  • Submit an application and await approval

SBA Loan Types and Rates

There are several different types of SBA Loans and SBA Loan programs available to small business owners, investors and entrepreneurs. However, the type of loan that’s most commonly utilized by small business owners is the SBA 7(a) Loan program. This program offers the flexibility and financial backing that many small business owners need to get their businesses off the ground or to address ongoing funding needs.

SBA 7(a) Loans

The 7(a) Loan program guarantees 85 percent of loan amounts under $150,000 and 75 percent of the total amount borrowed over $150,000 up to $5 million. There is no minimum loan amount for 7(a) Loans, making them suitable even for small businesses with lower funding needs.

Generally, SBA Loans require non-borrowed equity injection between 10-30 percent, some require collateral, and some are specifically available to active duty/veterans and their spouses. To understand all of the intricacies of SBA Loans and lending programs, it’s important to consult with a lending professional that understands the process from beginning to end. This is where Tenet Financial Group excels. We have funding experts on staff ready to answer your SBA Loan questions, help you find a lender and so much more. With one call to Tenet Financial Group, you will have a partner in place to help you achieve your business funding goals: (888) 901-3335, Option 9.