First of all, don't give up if one lender tells you you can't get an SBA loan. There are over 2,200 SBA lenders nationwide who all have different loan appetites. Second, make sure you work with an SBA-preferred lender. The process will be far less painful and take about half the time. And finally, don't automatically discount SBA loans as being too small. You'd be surprised at how much you can actually get.
The most popular of these programs is the 7(a), which provides working capital to grow and expand your business. In addition to increasing inventory and hiring more staff, this working capital can also be used to acquire a business, buy out a partner, or even refinance your debt. These loans can go up to $5 million with 10-year repayment periods and interest rates around 6 percent.
These programs are outstanding in "normal" times and are even better now due to the pandemic-related sweeteners. There are no guarantee fees on new loans through Sept. 30th, 2021. Those fees typically run at 2.5 percent of the guaranteed loan amount. Plus, there are three months of payment forgiveness of up to $9,000 per month. All payments the SBA makes on your behalf are non-taxable. The catch is, you can't wait until Sept. 28th to make a decision. Starting the process within the next few weeks is imperative if you want to secure those benefits.
The SBA has also increased its guarantee to lenders to 90 percent. Higher guarantees encourage banks to make riskier loans than they otherwise would. In other words, your odds of getting approved have gone up.