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+1-802-778-9005The down payment for SBA loan ranges from 10% to 30% of the total loan amount. Down payment varies by borrower’s qualifications and loan type availed. Some loans do not require a down payment.
SBA loan programs are most sought after as they are affordable and offer low or competitive interest rates with longer repayment terms as compared to traditional business loans.
U.S. Small Business Administration facilitates loan programs for small businesses by facilitating borrowers and lenders. SBA guarantees payment for a portion of the loan so that lenders can offer more affordable interest rates for business owners.
A borrower applies through a bank, a credit union, or any other form of a lending institution to the SBA for the loan guarantee. The loan guarantee by US Small Business Administration, makes the loan less risky, thereby encouraging competitive interest rates and better chances for loan approval.
The maximum loan amount guarantee can be up to 85%. This helps in determining the down payment amount too.
SBA loans require down payment as a signal to show the commitment by the owner or in other words, how much the business owners are invested?
Small Business Administration (SBA) also assists business startups. Its earlier program known as the 7(J) Management and Technical Assistance Program, is now renamed the “Empower to Grow” program.
SBA 7 a loan program provides loan amount up to $5 Million and the payment tenure can range from 5-25 years.
A business owner can utilize SBA loans for the following purposes:
The interest rates for the loan can be fixed or variable, and it is calculated by adding a percentage to the prime rate.
All 7 A SBA Loan programs require SBA FORM 1919 and certain categories may require additional procedures mentioned by third-party lenders.
The 504 CDC (Certified Development Company) loan program offers loan amount up to $5.5 million and the payment tenure varies from 10, 20, or 25 years.
SBA 504 CDC Loan programs is a partnership between small business owners, CDC (Certified Development Company), and a third-party lender.
A business owner can utilize SBA 504 CDC Loan for the following purposes:
This SBA loan is for the long term with a fixed interest rate and aims to finance major asset purchases.
SBA CAPLines business loan is a part or type of 7 a loan where the down payment requirement can be around 10% and the maximum payment tenure is up to 10 years.
SBA CAPLines aims to help small businesses finance working capital needs and meet short-term requirements. Due to this, there are different CAPLines programs and the interest rates and repayment terms are negotiated between SBA lenders and small business owners.
CAPLines loans take longer approval due to specific documentation and collateral requirements by many SBA lenders.
The approval time for SBA Express loans is around 36 hours only, justifying the name “Express”. The maximum loan amount is up to $500,000 and repayment tenure is up to 10 years (buying a business or working capital financing) and 25 years (purchasing real estate).
The interest rate for SBA Express Loans is variable and is tied to a prime rate, on which at spread is determined by the third-party lender.
SBA lenders require their own forms and procedures for an express loan in addition to SBA Form 1919.
| SBA loan type | Maximum loan amount | Down Payment | |
| 1 | 7(a) loans | Up to US $ 5 million. | 10% or more. |
| 2 | SBA 504 CDC Loan | Up to US $5 million (up to US $5.5 million for select projects). | 10% to 20%. |
| 3 | SBA Express Loans | Up to US $500,000 | 10% |
| 4 | SBA Export Loans | Up to US $500,000 | Not Required. |
| 5 | SBA Microloans | Up to $50,000. | Not Required. |
| 6 | SBA Disaster loans | Up to $2 million. | Not Required. |
SBA Disaster loan has a loan amount of up to $ 2 million and its repayment terms are up to 30 years. The disaster loans help businesses affected by “declared disasters” and help to rebuild or repair after the insurance claim is being paid.
SBA offers various types of disaster loans:
The maximum interest rates for disaster loans is 8%.
SAB Export loans are meant to enable small businesses to either expand or foray into international trade. SBA loan program for exporters has two programs: the Export Express Loan Program, and the International Trade Loan Program (ITL).
Export Express Loan is to help small businesses that have potential for exporting. It helps in export-related activities including purchasing inventory, financing export transactions, etc. The maximum loan amount for this SBA loan is $500,000 with a very short turnaround time of 36 hours.
Export SBA Loans have a variable interest rate and it is determined by the lenders by adding their spread over the prime rate.
Microloans have interest rates ranging between 8% to 13% and have no required down payment requirements. SBA Microloans are disbursed by intermediary lenders offering loan amounts up to $50,000 with payment terms of 6 years.
The microloans as the name suggests are not meant to buy real estate or big machinery but microloans are used for rebuilding, repairing, or upgrading the business.
A microloan can take up to 2 months to get approved, though microloans have flexible collateral and other requirements as compared to other SBA loans.
Some SBA loans require a down payment while there is zero down payment for certain loan types which require smaller amounts. Following are the ways to fund your sba loan down payment requirement:
SBA loan down payment requirements reduce the risk exposure of the lenders and enable them to offer affordable interest rates for small businesses. Taking a business loan is a risk as well as an opportunity for business owners as debt leveraging can give strategic advantage culminating in growth and expansion, on the other side the conventional risks of debt do
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