If you are planning to grow your small business or starting business, Small Business Administration Guaranteed Loans (SBA Loan) would be your best option. The Small Business Administration (SBA) is a United States government agency which provides support to entrepreneurs and small businesses. The SBA provides a government-backed guarantee on part of the loan, and Shinhan Bank America is currently participating as a PLP (Preferred Lenders Program) Lender. Under PLP program, SBA delegates the final credit decision and most servicing and liquidation authority and responsibility to PLP lenders.
SBA 7(a) Term Loan (SBA Loan)
SBA 7(a) Term Loan is designed to provide financing to establish a new business or to assist in the acquisition, operation, or expansion of an existing business. This is ideal for for-profit businesses in various industries, including new, start-up or recently acquired companies. The terms are decided primarily based on the ability to repay, the purpose of the loan proceeds and the useful life of the assets financed. However, maximum loan terms have been established: 25 years for real estate, up to 10 years for equipment (depending on the useful life) and generally up to 7 years for working capital. Short-term loans and revolving lines of credit are also available in order to meet seasonal or cyclical working capital needs. The maximum loan amount for 7(a) loan is $5 million, and it does not have a minimum loan amount. In order to eligible for SBA 7(a) Loan program, businesses must:
- Operate for profit
- Be small as defined by SBA
- Be engaged in the United States or its possessions
- Have reasonable invested equity
- Use alternative financial resources, including personal assets, before seeking financial assistance
- Be able to demonstrate a need for the loan proceeds
- Use the funds for a sound business purpose
- Not be delinquent on any existing debt obligations to the U.S. government
- A business cannot have a tangible net worth in excess of $15 million
- A business’s average net income cannot exceed $5 million after tax for the preceding two years
Under 7 (a) loan program, SBA Express program features an accelerated turnaround time for SBA review by providing a response to an application within 36 hours. The maximum loan amount is $350,000 and the maximum SBA guaranty portion is 50%.