46 ©2018 WASHINGTON DC ECONOMIC PARTNERSHIP BUSINESS FINANCING
There are many reasons why an SBA guaranty may be
necessary, including:
• Lack of collateral
• Lower than normal down payment or equity
• Longer term/lower payments required to meet debt
coverage requirements
• Riskier industries (entertainment, high tech,
service, retail)
• Uneven historical revenues or profits
• Tighter than normal debt coverage
• Change of ownership or management
• Reliance on projections
• Lending limits
The SBA does not extend financial assistance to businesses
when the financial strength of the individual owners or
the company itself is sufficient to provide all or part of the
financing. Both business and personal financial resources are
reviewed as part of the eligibility criteria. If these resources are
found to be excessive, the business will be required to use those
resources in lieu of part or all of the requested loan proceeds.
Application procedures for SBA loans vary depending on the
type of loan, as well as the lender, so it is important to ask the
local lender which format is required.
7(A) PROGRAM
The SBA's 7(a) loans are designed to help small businesses
in starting, acquiring, and expanding their interests. The
program encourages lenders to extend credit to small
businesses by guaranteeing a portion of the loan: up to 85
percent on loans less than $150,000, and up to 75 percent
on loans greater than $150,000. The maximum loan amount
is $5 million, but the maximum guaranty to the lender
is $3.75 million or 75 percent. The money can be used to
purchase property or equipment, fund long-term or shortterm
working capital, finance against inventory or refinance
existing debts, and cover new construction or expand
existing facilities.
Within the 7(a) loan framework are multiple categories of
loans designed for specific functions. For more detailed
information on the following programs, visit
sba.gov/partners/lenders/7a-loan-program/types-7a-loans.
CAPLINES
CAPLines is for loans up to $5 million for small business
owners to meet their short-term and cyclical working
capital needs. The Employee Trusts Program provides
financial assistance to Employee Stock Ownership Plans.
Export loans aim to help small businesses take advantage
of the world market and can include 90 percent guarantees
and financing up to $5 million to support exporting efforts.
SBA EXPRESS
SBA Express loans streamline and expedite the loan process
by providing rapid responses (within 36 hours of submitting
applications) and lowered interest rates. SBA Express loans
carry a maximum of 50 percent guaranty on loans between
$25,000 and $350,000. These loans can be used for working
capital and to purchase equipment, vehicles or inventory.
ADVANTAGE LOANS
SBA’s Advantage Loans are the equivalent of a basic 7(a)
loan but are designed to encourage larger, existing SBA
lenders to make smaller-dollar loans that benefit businesses
in underserved markets. These loans offer a streamlined
application process, with minimal paperwork and a twopage
application. Most loans will be approved in a matter of
minutes through electronic submissions; non-delegated loans
will take five to ten days.
THE SMALL LOAN ADVANTAGE PROGRAM allows lenders to get
a pre-qualification indication from SBA that the applicant
business has sufficient creditworthiness to warrant giving
the applicant full consideration for financing. The maximum
Small Loan Advantage amount is $350,000.
COMMUNITY ADVANTAGE is a pilot initiative aimed at
increasing the number of the SBA 7(a) lenders who reach
underserved communities, targeting community-based,
mission-focused financial institutions that were previously
not able to offer SBA loans. The maximum Community
Advantage loan size is $250,000.
THE SBA VETERANS ADVANTAGE PROGRAM lowers the upfront
fees for eligible borrowers, according to the type and size of
the loan. To learn more, visit sba.gov/veterans.
In order to qualify for SBA Veterans Advantage, businesses must
be 51 percent or more owned and controlled by an individual or
individuals in one or more of the following groups:
• Veterans
• Service-disabled veterans
• Eligible active duty service members participating in the
military’s Transition Assistance Program
• Reservists and National Guard members
• Current spouse of any of the above
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