What is an SBA Guaranteed Loan?
For those applicants that meet the SBA’s credit and eligibility standards, the Agency can guaranty up to eighty five (85%) percent of loans of $150,000 and less, and up to seventy-five (75%) percent of loans above $150,000 (generally up to a maximum guaranty amount of $1,500,000). Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums, which are pegged to the Wall Street Journal prime rate. SBA loan programs are generally intended to encourage longer term small business financing but actual loan maturities are based on the ability to repay, the purpose of the loan proceeds, and the useful life of the assets financed. However, maximum loan maturities have been established: twenty-five (25) years for real estate, ten (10) years for business acquisition and equipment; and, generally seven (7) years for working capital and inventory purchase. Why Should I Do an SBA Guaranteed Loan Instead of a Commercial Loan?
