The Small Business Administration offers SBA loans to encourage success and profitability for small entrepreneurs. They have designated certain lenders as Preferred Financial who are authorized and recommended to offer their loans. These preferred lenders will process this type of loan more quickly and efficiently than many other financial companies.

Details of SBA Loans

For-profit small businesses are eligible for this type of loan. Wholesale, retail, and service businesses are included, whether they are independent or franchise operations. In order to qualify, sales may not exceed a certain average per year. The amount varies according to the industry but ranges between $6 million and $20 million. Any wholesale business with less than 100 employees is eligible. Any manufacturer with less than 500 employees qualifies as well.

The SBA 7(A) is the most common of the SBA loans. The loan size is typically $25,000 to $2,000,000. The funds may be used for new start-up costs, working capital, or to purchase machinery or equipment. Other possible uses are for business acquisitions, real estate financing, expansions, and lease improvements. Some of the advantages to these loans are longer terms, no points, and no balloon payments.

There are other credit requirements which must be met for SBA loans. Businesses must have adequate cash flow to cover the debt. Net worth of the business must be equal to industry averages. The borrower must be actively involved in everyday operations and have no past bankruptcies or felony arrests. These loans are a valuable resource for small businesses.