SBA Loans

SBA loans, or loans backed by the Small Business Administration (SBA), are provided to small businesses by SBA-approved lenders. The lenders for SBA loans are usually private but backed by the Federal Government. Businesses receiving SBA loan financing often receive funds to cover startup costs, working capital, expansions, real estate purchases, and other essential expenditures.

Small business owner discussing financing options with a banker

There are many different types of SBA loans, but the three below are the most common.

The 7(a) Loan Program: The SBA’s most popular program. These loans are ideal for businesses that need working capital, want to refinance existing debt, or are looking to expand or acquire real estate. At Peoples Bank, we are a preferred SBA lender and specialize in 7(a) loans.
The 504 Loan Program: This program is specifically designed for businesses looking to purchase or improve fixed assets, such as real estate, buildings, or machinery.
SBA Express Loans: This final common SBA loan offers a faster approval time, making it ideal for businesses that need quick access to capital.

Since Peoples Bank specializes in SBA 7(a) loans, the rest of this page will focus on that program.

Benefits of an SBA 7(a) Loan

There is a reason the SBA 7(a) loan program is the most popular type of SBA loan: it offers small businesses a number of benefits. Most importantly, an SBA 7(a) loan guarantee allows approved lenders to offer loans to less qualified borrowers under more favorable terms, similar to those of standard bank small business loans.

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These favorable terms include:

Extended Amortization Periods
Reduced Cash Flow Requirements
Lower Down Payments
More Lenient Collateral Requirements

Other benefits of SBA 7(a) loans include the following:

Shorter prepayment penalty requirements
Flexible use of the funds.
Accessible financing.
Competitive interest rates.
Longer repayment terms than other SBA loans.
Easier qualification for many small businesses.
Variety of loan options.

Types of SBA 7(a) Loans

The SBA 7(a) Loan Program offers many loan types tailored to different business needs. Here are the most common SBA 7(a) loan types.

Standard 7(a) Loan: Max loan amount is $5 million.
7(a) Small Loan: Max loan amount is $500,000.
SBA Express Loan: Max loan amount is $500,000.
Export Express Loan: Max loan amount is $500,000.
Export Working Capital Loan: Max loan amount is $5 million.
International Trade Loan: Max loan amount is $5 million.
CAPLines: Max loan amount is $5 million.

Small business owners discussing growth plans and financing

Loan Terms for SBA Loans

The terms for SBA loans vary depending on the type of loan, the purpose of the funds, and the financial situation of the borrower. However, we have included some of the typical loan terms below.

Up to 7 years of working capital.
Up to 10 years for machinery & equipment.
Up to 25 years of real estate.

Interest Rates for SBA 7(a) Loans

Interest rates are negotiated between the borrower and lender, although rate ceilings are determined by the SBA. Interest rates are typically based on the Prime Rate plus an additional percentage, known as a spread. The spread varies depending on the loan’s size and term, as well as the borrower’s and business’s qualifying criteria.

Determining if an SBA Loan Suits Your Business

SBA loans offer unique benefits, but they may not be the perfect fit for every situation—the suitability of an SBA loan for your business hinges on your specific circumstances.

The SBA 7(a) loan is tailored for small business owners who face difficulties securing a conventional bank loan. Common challenges include the need for lower payments, insufficient down payment, or inadequate collateral. If these issues resonate with you, an SBA loan could be an ideal solution for financing your business’s start-up or growth.

Ensure you also assess the following factors to determine if an SBA 7(a) loan is right for you.

The purpose of the loan and the amount required.
Your credit score (most SBA loans require at least a 620).
The business’s financial health and history.
Review alternatives.
Seek professional advice from the team at Peoples Bank.

Team members collaborating on financial strategies

SBA loans can help small businesses access necessary capital. However, they come with stipulations, such as a proven track record (for existing businesses) or a viable business plan (for start-ups), along with strong credit for both the business and its principal owners. If these requirements are a concern, contact us for an assessment of your eligibility for an SBA loan or for guidance on how to meet these criteria.

How the Process Works

If you decide an SBA 7(a) loan is right for your business, it is time to contact Peoples Bank. Our team will help you every step of the way. Our simple and transparent process will follow the basic structure outlined below.

Consultation: Schedule a consultation with our experienced loan officers to discuss your business and its needs.
Application: We will then help you complete and submit your SBA loan application.
Approval: Our team will work tirelessly with the SBA to expedite your approval process.
Funding: Once approved, you will receive your funds and put them to work for your business.

FAQs About SBA 7(a) Loans

1) What is the minimum credit score required for an SBA 7(a) loan?

SBA does not have a set credit score minimum. Keep in mind, however, that some lenders may have their own benchmarks. They will also consider other factors, such as your business’s financial health, your collateral, and your overall creditworthiness.

2) Can I use an SBA loan to refinance existing debt?

Yes, you can use an SBA loan to refinance existing debt, provided you meet certain criteria, including having a spotless payment history (no payments 30 days late) on the debt over the past 12 months. The SBA permits refinancing under specific conditions, especially when it can improve your cash flow or provide more favorable terms on your current debt. Key considerations include:

a. Improved Loan Terms: The SBA loan must offer better terms than your existing debt, such as a lower interest rate, an extended repayment period, or reduced monthly payments, ultimately strengthening your business’s financial position.

b. Eligible Use of Original Debt: The debt you’re looking to refinance must meet SBA eligibility guidelines. Refinancing is more likely to be approved if the original debt was used for essential business purposes, such as purchasing equipment, inventory, or working capital.

c. Positive Cash Flow Impact: The refinancing should lead to an improvement in your business’s cash flow. Typically, the SBA requires that the new loan reduce monthly payments by at least 10%, though exceptions may apply depending on the specific situation.

d. Restrictions on Personal Debt: Certain types of debt, like personal loans or credit card balances, generally aren’t eligible unless the funds were used specifically for business-related expenses.

SBA refinancing is often used for a range of financial adjustments, including debt restructuring, financing renovations or conversions, and making changes to loan terms or interest rates, among other needs.

3) Why should I choose Peoples Bank for my SBA loan needs?

Peoples Bank is a stable and reliable financial institution with over 30 years of experience in SBA lending. As a CDFI (Community Development Financial Institution) community bank that has been in business since 1908, we have a long-standing commitment to supporting local businesses. Our expertise and deep understanding of SBA programs ensure that you receive the best possible guidance and support throughout the loan process.

4) How quickly can Peoples Bank process my SBA loan application?

As an SBA preferred lender, Peoples Bank handles all steps of the SBA loan process in- house, allowing for quick turnarounds on preapprovals and loan scenarios. We strive to close most loans within 60 days or less, ensuring that you receive the funds you need in a timely manner.

5) How reliable is Peoples Bank in closing SBA loans?

Peoples Bank is known for its reliability and strong communication throughout the loan process. We are committed to closing the loans we approve, providing clear and consistent updates at every stage. Our dedicated team works diligently to ensure a smooth and successful loan experience for all our clients.

To learn more about an SBA loan, please contact us or give us a call today at (843) 606-6058 or toll-free at (855) 406-0197 for a free consultation. Let us help you determine if a SBA loan is right for you!