The Small Business Administration (SBA) has a number of loan programs designed specifically for small and medium sized businesses, including microloans, SBA 7(a) loans, and CDC/504 loan program.
Midstreet Capital has been helping small business owners and entrepreneurs secure financing via SBA loan programs for years. We specialize in helping business owners successfully apply for the right type of funding to accomplish their short-term and long-term goals.
What is an SBA Loan?
SBA loans were designed to support and encourage the growth and development of small businesses across the United States. SBA loans are offered to borrowers through multiple financial institutions.
SBA Loan Guarantee Program
The SBA guarantees a portion of the loan, which makes it easier for lenders to provide loans to small businesses that may be classified as high risk. These businesses may not be in the financial position to obtain traditional small business loans.
Program Features
SBA programs offer smaller down payments and financing that is typically on terms longer than traditional providers can offer. This flexibility helps businesses just starting out, those looking to expand, or manage their cash flow more effectively. SBA programs also allow small businesses to focus on operational expenses rather than debt repayment.
Loan Purposes
Loans from the SBA are provided for various purposes. Typical uses include:
- Business start-ups or acquisitions
- Working capital
- Owner-occupied real estate
- Franchise financing
- Inventory
- Debt refinancing
- Equipment
- Improvements and renovations
Choosing an SBA Lender
Midstreet Capital can help borrowers find the right SBA lender for their needs, and we have the experience needed to make SBA borrowing easier and more convenient for our clients.
| Loan Type | SBA Express Loans | SBA 7(A) Loans | SBA 504 financing |
|---|---|---|---|
| Loan Benefits | Good source of long term financing for working capital needs. | Excellent source for flexible use of proceeds. No balloons or calls and provides highly leveraged financing. | An excellent long term fixed rate product. |
| Eligibility | Borrower(s), Business and Use of Proceeds all need to be eligible. Age of business needs to be greater than 18 months. Owners should either be US citizens or Green card holders. | Borrower(s), Business and Use of Proceeds all need to be eligible. Owners should either be US citizens or Green card holders. Foreign aliens can qualify if they own less than 49% of the business. | Small business must occupy at least 51% of real estate asset and comply with federal business size standards. The business cannot have sales over $6 million or employ more than 500 employees. |
| Use of Proceeds | Usually used for financing working capital needs or for buying equipment. | Financing for long and short term assets used in normal business operations. Acquisitions and refinances are eligible, and may include real estate and business goodwill. Working lines of credit up to $100,000 are also eligible. | Used to finance long term assets like real estate or equipment. |
| Loan Amounts | Up to $350,000. Loans up to 100,000 do not require any proof of income. Loans above $100,000 require last 2 yrs of business and personal tax returns on all principals having more than 20% stake. | Up to $5,000,000 Loans require last 3 yrs of business tax returns, real estate schedule if applicable and 2 yrs of personal tax returns on all principals having more than 20 % stake. | 1st Mortgage = No Limit 2nd Mortgage
|
| Rate structure | Rates adjust quarterly, indexed off the Wall Street Journal Prime rate. Typical rates vary from prime plus 1 to prime plus 4. | Rates adjust quarterly, indexed off the Wall Street Journal Prime rate. Typical rates range from Prime plus 1 to prime plus 2. | 1st Mortgage = both fixed and adjustable rates are available.
2nd Mortgage = Fixed rates only. Typical rates are around prime minus 1 on fixed rates. |
| Typical Loan Amortization | Up to 7 years, fully amortized. Typical loan term is around 3 to 5 yrs with an option to roll over up to 7 yrs. | Amortization depends on the use of proceeds. Loans amortize from 7 to 25 years. Loans are fully amortized with no Balloons or Calls. | 1st Mortgage loan provides a maximum amortization of 25 years.
2nd Mortgage loan provides a maximum amortization of 20 years. |