When and Who Should Use an SBA Loan?

When and Who Should Use an SBA Loan?

 Loan programs are just one of the many resources offered by the SBA, or Small Business Administration. These programs help small business owners gain access to capital. The SBA does not directly loan the money but works with lenders to provide the loans. There are several loan programs to meet various needs from getting started with a new business to purchasing real estate.

Qualifying for an SBA Loan

There are several qualifiers to be considered for an SBA loan. These qualifiers are as follows:

Operate for profit
Be based in the U.S.A or U.S. territory
Have owner investment
Have depleted all other options for financing

Types of SBA Loans Available

There are several different loan programs offered by the SBA. Three of the most popular ones are discussed below:

7(a) Loan

Primary loan program for small businesses. There are over a half dozen types of 7(a) loans, including:

Standard 7(a)
Small 7(a)
SBA Express
Export Express
Export Working Capital
International Trade

There are a couple more 7(a) loans, including one that caters to Veterans and one that addresses the short-term needs of a small business.

CDC/504 Loan

This is a long-term tool meant to support the economic development of a community. It can be used for expansion/modernization, as it offers long-term fixed-rate financing.

This program offers a maximum amount of $5 million to $5.5 million, depending on the project/business. These loans are typically structured to where the SBA covers 40% of the project, the lender covers up to 50%, and the borrow contributes the final 10%.


This loan program provides up to $50,000 to start/expand small businesses and certain not-for-profit childcare centers. A microloan can be used as working capital, or to purchase inventory, supplies furniture, fixtures, equipment, or machinery.

Application Process for SBA Loans

The requirements, eligibility requirements, turnaround time, and application process vary depending on the type of loan you’re seeking. Below, we’ll take a closer look at the steps in the process and what you can expect to happen.

You’ll need a business plan to show the potential lender when you meet with them.

You will complete the application- once this is done, it goes to the lender and they do the credit analysis.

The lender will approve or not- a delegated lender can approve loans without the SBA taking time to review the application. If the lender is not SBA delegated, the lender will send the application to the SBA.

The SBA will review the application and pull a credit report. The SBA will then decide on SBA guarantee eligibility.

SBA informs the lender of their decision, and the authorization is prepared.

The lender handles the underwriting of the loan and gets the necessary paperwork in order.

The lender will service the loan, making sure everything is going as outlined in the loan authorization.

Once the loan is paid, the note will be marked as such and any liens on collateral are released.


If you’re interested in exploring your options for SBA loans, contact Masters Commercial Capital Group. We will be more than happy to guide you through the process.