1) What is an SBA loan in simple terms?
An SBA loan is a business loan from a private lender that’s partially guaranteed by the U.S. Small Business Administration. The guarantee helps lenders offer longer terms and competitive rates.
2) What are the main differences between SBA 7(a), SBA Express, and 504?
7(a) is the most flexible for working capital, equipment, acquisitions, and owner-occupied real estate. SBA Express is a smaller, faster 7(a) option. 504 is best for long-term, fixed-rate financing of commercial real estate and heavy equipment.
3) What are typical SBA loan requirements?
Common requirements include 2+ years in business, sufficient cash flow (often 1.15x–1.35x DSCR), solid credit, personal guarantees from 20%+ owners, available collateral where feasible, and a clear, eligible use of proceeds.
4) How are SBA loan rates set?
Most 7(a) loans are variable, priced as Prime plus a margin based on risk factors and SBA rules. 504 debentures are generally long-term fixed. Always review both interest and total costs.
5) How long does an SBA loan take to fund?
Timelines vary by deal complexity and responsiveness. SBA Express can be days to weeks, many 7(a) loans run 4–10 weeks, and 504 real estate projects can take 60–90+ days.
6) How much down payment do I need?
For acquisitions and start-ups, many deals include around 10% equity injection (sometimes more). For established working capital needs, an injection may not be required, but lenders expect adequate liquidity.
7) Can I refinance existing debt with an SBA loan?
Often yes, if it improves cash flow and meets SBA eligibility. Lenders will review payoff letters, terms, and whether the refinance provides a “substantial benefit.”
