If you're a business owner looking for financing, you've probably heard someone mention SBA loans. But the program can be confusing, and most of what you'll find online is either too vague or written for bankers.
Here's what actually matters.
What is an SBA loan?
The Small Business Administration doesn't lend you money directly. Instead, it guarantees a portion of the loan, which makes banks more willing to lend to you. Think of it as the government co-signing your loan.
This means you can get:
- Lower down payments (as low as 10%)
- Longer repayment terms (up to 25 years for real estate)
- Rates that are typically better than conventional alternatives
The three main programs
SBA 7(a)
The most common SBA loan. Use it for almost anything: working capital, equipment, buying a business, refinancing debt. Loans up to $5 million.
SBA 504
Specifically for real estate and large equipment purchases. These are structured as two loans: one from a bank and one from a Certified Development Company (CDC). Great rates, but more paperwork.
SBA Express
Smaller loans (up to $500,000) with a faster turnaround. The trade-off is a lower guarantee percentage, so not every lender offers them.
Common mistakes that kill deals
Applying to just one bank. Every lender has different appetites. One bank might turn you down while another fights to win your deal. Always shop around.
Incomplete documentation. The number one reason deals stall. Tax returns, financial statements, business plans, proof of equity injection. Have it all ready before you apply.
Not understanding the timeline. SBA loans take longer than conventional loans. Plan for 30 to 90 days from application to funding, depending on the program and lender.
How a broker helps
A good broker packages your deal the way lenders expect it, submits to multiple lenders at once, and negotiates terms on your behalf. You get better rates, faster answers, and one person handling the process instead of juggling five bank relationships yourself.
That's what we do at Cassian. If you have a deal you'd like us to look at, reach out.