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SBA Loans

Loan Prequalification Program

The Program
  • Helps you prepare your loan prequalification application;
  • Provides you with an SBA-guaranty commitment letter upon application approval;
  • Allows for a maximum SBA guaranty of 85 percent for loans up to $150,000 and 75 percent for loans above $150,000;
  • Provides up to $250,000; and
  • Speeds lender consideration of your loan.
How it Works
Step 1: The prospective borrower works with an intermediary* - a technical-assistance organization designated by the SBA - to prepare a business plan and complete a loan prequalification application.
Step 2: The intermediary reviews the applicant's credit information, performs a loan analysis and submits the application to the SBA.
Step 3: The SBA reviews the completed application to determine whether it meets the requirements for a guaranteed loan and makes an approval decision.
Step 4: If the application is approved, the SBA issues a prequalification letter stating the agency's intent to authorize a loan guaranty.
Step 5: The applicant "shops" the prequalified loan to lenders interested in making SBA guaranteed loans - often with the intermediary's assistance.

*Intermediaries may charge a fee for some or all of their services. Check on fees prior to engaging an intermediary.

Interest Rates
The borrower and the lender may negotiate the interest rate. The interest rate can be either fixed or variable, is tied to the prime rate (as published in The Wall Street Journal) and may not exceed the following SBA maximums:
  • 2.25 percent over prime for loans of less than seven years, and 2.75 percent over prime for loans of seven years or longer.
  • For loans up to $25,000, there may be an additional charge and up to $50,000, there may be an additional charge of 1 percent.
Collateral
  • To secure the loan, the borrower must pledge available assets: generally, loans are not declined when inadequate collateral is the only unfavorable factor.
  • Personal guaranties of the principals are required.
Loan Maturity
The length of time for repayment depends on
  • The borrower's ability to repay, and
  • The use of the loan proceeds

Maturity is generally five to 10 years. For fixed-asset loans it can be up to 25 years.

Eligibility
A business is generally eligible for the program if
  • The purpose of the loan is to start or grow a business;
  • The existing business has average annual sales for the preceding three years not exceeding $5 million, and the business employs no more than 100 people, including affiliates;
  • The business and the owners have good credit; and
  • The business owners are of good character.
SBA Affiliates
  • SCORE - Small Corps of Retired Executives
  • SBDCs - Small Business Development Centers
  • Local SBDC & Score : (903) 510-2975


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