SBA Funding Program Summary

SBA Funding Program Summary The U.S. Small Business Administration offers funding programs for small businesses under the following categories: • 7(a) Loans • Pilot Loan Programs • CDC/504 Loans • Micro Loans • Disaster Loans

SBA 7(a) Loans Small business loans partially guaranteed by the U.S. Small Business Administration and issued by participating lenders, usually banks. Assists in funding working capital, business expansion and equipment purchases.

Loan Requirements: • Must be a for-profit business operating the U.S. • Must be a small business, defined by the SBA. • As a business owner, must have invested your own time and money into your business.

• Must be able to demonstrate the need for a loan and show the business purpose for the funds.

SBA 7(a) Loan Terms: Maximum SBA Guarantee

Application Turnaround Time

$5 million

85% for loans up to $150,000 and 75% for loans greater than $150,000

Five to 10 business days

Funding working capital, equipment, supplies, and business expansion

7(a) Small Loan

$350,000

85% for loans up to $150,000 and 75% for loans greater than $150,000.

Five to 10 business days

Funding smaller financing needs

Express Loan

$500,000

50%.

Within 36 hours

Fast funding for smaller loan amounts

Export Express Loan

$500,000

90% for loans of $350,000 or less and 75% for loans more than $350,000.

24 hours

Funding to enhance a business’s export development

Export Working Capital Loan

$5 million

90%.

Five to 10 business days

Funding working capital to support export sales

International Trade Loan

$5 million

90%

Five to 10 business days

Long-term funding to expand export sales

SBA 7(a) Loan Type

Standard 7(a) Loan

Maximum Loan Amount

Purpose

SBA 7(a) Variable Loan Rates: Loan Amount

Less than Seven Years

More than Seven Years

Up to $25,000

Prime rate + 4.25%

Prime rate + 4.75%

$25,001 - $50,000

Prime rate + 3.25%

Prime rate + 3.75%

$50,000 or more

Prime rate + 2.25%

Prime rate + 2.75%

* SBA 7(a) Loans cannot exceed these rates and are negotiable with lender.

SBA 7(a) Fixed Loan Rates: Loan Amount

Fixed rate maximum

Up to $25,000

Prime rate + 8.0%

$25,001 - $50,000

Prime rate + 7.0%

$50,001 - $250,000

Prime rate + 6.0%

Over $250,000

Prime rate + 5.0%

* SBA 7(a) Loans cannot exceed these rates and are negotiable with lender.

SBA Express Loan Rates: Loan Amount

Rate maximum

$50,000 or less

Prime rate + 6.5%

More than $50,000

Prime rate + 4.5%

* SBA Express Loans cannot exceed these rates and are negotiable with lender.

In addition to the interest rates, the SBA may charge a one-time fee in proportion to the loan amount: • Loans of $150,000 or less: No guaranteed fee • Loans of $150,001 to $700,000: A 3.0% guaranteed fee • Loans of $700.001 and above: A 3.5% guaranteed fee • Loans above $1,000,000: A 3.5% guarantee on the first $1,000,000 and an additional 0.25% - 3.75% on the portion above.

Maximum term rates for SBA 7(a) Loans: • 25 years for real estate • 10 years for equipment • 10 years for working capital or inventory loans Attaining an SBA 7(a) loan: • SBA 7a loans may be issued by banks whether they hold a preferred SBA status or not.

• In the event the bank does not hold a preferred SBA status, they work directly with the SBA to obtain the needed loan guarantee.

SBA Pilot Loan Program – Community Advantage Increases access to credit for small businesses located in underserved areas.

SBA CA Loan Terms: Loan Amount: Up to $350,000 Maximum SBA Guarantee %: • 85% for loans up to $150,000 • 75% for loans greater than $150,000 • 90% for International Trade Loans Interest Rates: • Loans of $50,000 or less: Prime rate + 6.5% • Loans of $50,000 up to and including $250,000: Prime rate + 6.0% • Loans greater than $250,000: Prime rate + 5.5% Program expiration date: September 30, 2024

SBA CDC/504 Loans Fund long-term, fixed assets like real estate or equipment purchases/upgrades.

Loan Requirements: • Meet the SBA definition of small business • Not delinquent on any government loans • Strong personal credit • Operate as a for-profit company in the U.S. • Have tangible net worth of less than $15 million • Have an average net income of less than $5 million after federal income tax for the two years preceding application • Two years of business history • Loan request of at least $30,000 • At least $100,000 in revenue for the past 12 months Loan Rules: • Can be used for the purchase or construction of existing buildings or land, new facilities, long-term machinery and equipment.

• Can be used for the improvement of land, streets, utilities, parking lots, landscaping and existing facilities.

• Cannot be used for working capital or inventory, repaying or refinancing debt, or investment in real estate.

SBA 504 Loan Terms: Loan Amount: Up to $5.5 million Interest Rates: • Rates are tied to the five and 10-year U.S. Treasure notes • As of May 2022, 20-year loans are 4.66% and 10-year loans are 4.49% Repayment Terms: 10, 20 or 25-year maturity terms available Fees: Total approximately 3% of the debenture Approval Time: May take a couple of weeks

SBA 504 Loan Structure: • Typically, the bank contributes 50% of the loan, holding it as the first lien, and the SBA lends 40% of the loan, with a second lien. Normally, the borrower must contribute 10% of the total project cost; however, this may be subject to change based on the industry.

SBA Microloans Fund working capital, inventory, supplies, equipment, and machinery. Fully funded by the U.S. Small Business Administration and administered by an intermediary network of nonprofit community-based lenders, rather than banks.

SBA Microloan Terms: Loan Amount: Up to $50,000 Interest Rates: • Rates typically range from 8% to 13% Repayment Terms: Up to six years Fees: Up to 3% of the loan amount (up to 2% for loans with terms less than a year)

SBA Disaster Loans Provide financial relief for small businesses dealing with emergencies.

Loan Requirements: • Meet the SBA definition of small business • Not delinquent on any government loans • Must have exhausted other financing options • Operate as a for-profit company in the U.S. • Must have invested time and money into the business SBA Disaster Loan Terms: Disaster Loan Type Maximum Loan Amount

Loan Use To repair or replace property damaged in a disaster, including equipment and inventory

Application Deadline 60 days after declaration of a disaster Nine months after the declaration of a disaster

Business physical disaster

$2 million

Economic injury disaster

$2 million

Helps meet financial obligations usually met if not for a disaster

Home and personal property

$200,000 on primary home repairs. $40,000 for personal items.

Repairs primary homes to predisaster conditions and repair or replace personal property.

N/A

Military Reservists Injury

$2 million

Covers operating expenses when an essential employee was called to active duty

One year after the employee is released from active duty

Economic injury disaster loan emergency advance (EIDL)

Up to $500,000 for a 570credit score $500,001 to $2 million for a 625-credit score

Offset a revenue loss due to COVID-19

N/A

Sources: • www.sba.gov • www.sba7a.loans • www.forbes.com • www.business.org • www.nerdwallet.com