Small Business Loans, SBA and Conventional
The Small Business Administration was created to assist small and
medium size, owner occupied businesses to have access to competitive capital for
the creation or expansion of most business types. Funds are available for
acquisition, refinance or start-up businesses including working capital and
inventory build up.
SBA 7(A) LOANS /
SBA 504 LOANS
Conventional "SBA" Type
Commercial Loans
SBA Forms
Sample SBA and Conventional Commercial
Loan Rates
SBA and Conventional Commercial Mortgage Loans Program Notes:
SBA 7(A) LOAN
The SBA 7(a) loan program is the
mainstay of the SBA program. Funds may be used for most business purposes.
Loan Uses:
Purchase Commercial Land or Buildings
Construction or Renovation of Facilities
Business Acquisition or Start-up
Provide Working Capital
Purchase machinery, equipment, fixtures
Purchase inventory
Loan Amounts:
$250,000 to $2,000,000
Repayment Terms:
Up to 25 years for the purchase of real estate assets
Up to 10 years for business acquisitions, working capital, and machinery and
equipment.
General
Eligibility Guidelines:
Owner-Occupancy of 51% on existing
or proposed building
A business must meet a an SBA size standard for its primary business activity
For-Profit businesses only
Reasonable owner equity investment
A business/borrower must have good credit
A business must be able to meet its debt payments, not just its loan payments
A business must operate in the United States or its possessions
Interest Rates and Fees:
Both fixed rate and variable rates are available
SBA 504 LOAN
The SBA 504 loan program is designed to provide long-term
financing for major fixed assets, such as land purchase and construction. The
proceeds of an SBA 504 loan may not be used for working capital, inventory,
investment property, or refinancing. Generally, the fixed assets being financed are used as collateral. Personal
guarantees of business owners are also required.
Loan Uses:
Purchase land or buildings
Construct or modernize buildings
Improve grounds or facilities
A Combination of the Above
Loan Amounts:
Combined Loan Amounts to $6,000,000
Repayment Terms:
Up to 25 years for the purchase of real estate assets
As little as 10% down payment
General
Eligibility Guidelines:
Owner-Occupancy of 51% on existing
or proposed building
A business must meet a an SBA size standard for its primary business activity
For-Profit businesses only
Reasonable owner equity investment
A business/borrower must have good credit
A business must be able to meet its debt payments, not just its loan payments
A business must operate in the United States or its possessions
Interest Rates and Fees:
Both fixed rate and variable rates are available
Conventional "SBA"
Type Commercial Mortgage Loans
Our conventional loan program serves growing businesses that require
long-term financing or refinancing for owner-occupied commercial real
estate. A conventional loan is often the best option for a business that is
not eligible for an SBA loan.
Loan Uses:
Purchase of commercial real estate
Refinancing of commercial real estate
Ground-up construction
Expansion
Loan Amounts:
Up to 85% loan-to-value financing
Up to $5,000,000
Repayment Terms:
Up to 25 years amortization
No Balloon Payments
General
Eligibility Guidelines:
Owner-Occupancy of less than 51% OK
For-Profit businesses only
Reasonable owner equity investment
A business/borrower must have good credit
A business must be able to meet its debt payments, not just its loan payments
A business must operate in the United States or its possessions
Interest Rates and Fees:
Both fixed rate and variable rates are available
SBA Forms
Sample SBA and Conventional Commercial
Loan Rates
|
Property Type |
Loan to Value |
Variable Rates |
Fixed Rates |
| Multi-Use, Industrial, Retail, Office,
Commercial Condos |
75% |
Prime + 0.75 |
Libor + 2.75 |
| Special Use, C-Stores, Flag Motels, Assisted
Living, Restaurants |
65% |
Prime + 1.00 |
Libor + 3.25 |
| Gas Stations, Independent Motels |
55% |
Prime + 1.50 |
Libor + 3.75 |
| Apartments (85% LTV with secondary
financing) |
75% |
Prime + 0.75 |
Libor + 2.75 |
| Small Business Administration Loans (real
estate acquisition) |
90% |
Prime + 1.75 |
See Notes Below* |
* SBA fixed rate loans requires conventional
first 50% as shown above in fixed column and an 40% SBA second,
fixed for 20 years at 6.3%.
SBA and
Conventional Commercial Loans Program Notes:
Borrowers Credit Score less than 650 add
.25% to the start rate
Loans Less than $500,000 add .25% to start
rate
Loans fully amortized for 15, 20 or 25 years
Fixed rate loans can be fixed for 5, 7, 10
or 25 years (No balloon payments – loans adjust after fixed period)
20 & 25 year fixed rates not
available for non-owner occupied properties
Fixed rate loans can be indexed with the
corresponding 5, 7 or 10 year LIBOR or Federal Home Loan Bank (FHLB)
Prepayment Penalties:
Variable rate requires 5,4,3,2,1% first five
years.
Fixed for 5 or 7 years requires 5% flat
first six years then declining. (Reduced prepayment penalty add .25% to start
rate)
Fixed for 10, 20 or 25 requires 10%
declining10 years.
Program Costs:
Bank fee 1% (Conventional Bank fee portion
of SBA 504 loan will be 1.5%)
Bank processing fee of $1,500 (Due upon pre approval)
Other Costs include Appraisal, Environmental
(if required), title and Closing Costs.
Documentation Requirements:
Personal Financial statements on borrowers.
Three years federal tax returns on borrowers
and/or businesses.
Purchase agreement or copy of notes to be refinanced.
Cash out loans require “Use of Proceeds”
information.
Income property requires detailed rent roll.
For SBA Loans, see SBA
Forms
On-Line
Apartment or Commercial
Application
See Also: Main
Commercial & Apartment Loan Page for many more apartment and commercial
loan programs.
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