Small Business Administration
Loan Comparison
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|
SBA 7(a) Term Loan |
SBA LowDoc |
SBA 504 Term Loan |
SBAExpress |
|
Eligibility |
For-profit
businesses Must qualify as a
small business according to SBA guidelines - Size varies by industry type |
For-profit
businesses Must qualify as a
small business according to SBA guidelines - Size varies by industry type |
Existing,
for-profit businesses Net worth must be
less than $6,000,000 Net profit (after
taxes) must be less than $2,000,000 Must create 1 job
for every $35,000 in SBA loan funds |
Existing,
for-profit businesses Must qualify as a
small business according to SBA guidelines - Size varies by industry type |
|
Loan Size |
There is no
minimum loan amount SBA loan
guarantee cannot exceed $1,000,000 Maximum loan
amount is $1,750,000. |
There is no
minimum loan amount Maximum loan
amount is $150,000 |
From $150,000 to
$3,000,000 ($2,500,000 for special purpose real estate) Maximum
$1,000,000 (up to $1,300,000 for public policy projects) financed by SBA. |
There is no
minimum loan amount Maximum loan
amount is $250,000 |
|
Use of Proceeds |
-Land |
-Land |
-Land -Buildings
(Purchase, new construction, or renovation) -Machinery &
equipment (with a minimum useful life of 10 years) |
-Machinery &
Equipment |
|
Financing |
Provided by local
banks SBA provides an
85% guarantee to local banks on loan amounts
up to $150,000. SBA provides a
75% guarantee to local banks on loan amounts
above $150,000. |
Provided by local
banks SBA provides an
85% guarantee to local banks on loan amounts
up to $150,000. |
50% financed by
local banks 40% financed by
SBA through a Certified Development Company . At least 10%
financed by borrower (higher for new businesses or special purpose real
estate). |
Provided by local
banks SBA provides a
50% guarantee |
|
Collateral |
SBA requires that
local banks take a first secured interest in business assets and/or a
mortgage on real estate |
SBA requires that
local banks take a first
secured interest in business assets and/or a mortgage on real estate |
Local banks hold the first
mortgage on real estate or the first secured interest in machinery &
equipment. . SBA holds the
second mortgage on real estate or the second secured interest in machinery
& equipment |
SBA requires
local banks to take a first secured interest in business assets and/or a
mortgage on real estate. |
|
Loan Terms |
Working Capital -
up to 7 years. Equipment - up to
10 years (or useful life) Real Estate - up
to 25 years |
Working Capital -
up to 7 years . Equipment - up to
10 years (or useful life) Real Estate - up
to 25 years |
Local bank loan -
minimum 10 years on real estate, 7 years on machinery & equipment SBA loan - 20
years on real estate, 10 years on machinery & equipment |
Revolving line of
credit available for up to 3 years. Term loans available
|
|
Interest Rates |
Rates can be
fixed or variable. Maximum Interest
Rates: -For terms up to 7 years Additional 2% may
be charged on loans less than $25,000 Additional 1% may
be charged on loans between $25,000 and $50,000 |
Rates can be
fixed or variable. Maximum Interest
Rates: -For terms up to 7 years Additional 2% may
be charged on loans less than $25,000 Additional 1% may
be charged on loans between $25,000 and $50,000 |
Local bank loan -
negotiated rate between borrower and Bank (fixed or variable) SBA loan - below
market fixed rate - fixed payment, loan rate set when debenture is sold |
Rates can be
fixed or variable. Maximum Interest
Rates: - For loans equal to or less than $50,000 the maximum interest rate is
New York Prime + 6.50% - For loans greater than $50,000 the maximum interest
rate is New York Prime + 4.50% |