A Small Business Administration (SBA) loan is an option for business owners who find themselves requiring funds to increase working capital, refinance debt or purchase commercial real estate. Smaller $30,000-$350,000 loans provide businesses with working capital that can be used for expenses associated with daily business operations or to refinance non-real estate related debt. A larger loan in the amounts of $500,000 to $5 million is used for purchasing or refinancing commercial real estate. Each of these loans has its own set of qualifications.
Working Capital or Debt Refinance Loan
A Working Capital or Debt Refinance Loan is typically a loan in the amount of $30,000 to $350,000. This loan is for businesses that have been in operation for more than two years. The business must be based in the United States. The business owner must be 21 years old or older and must be a U.S. citizen or lawful permanent resident of the USA. Additionally, the business owner must personally have a credit score that is 650 or above. Financially, the business needs to be current on any governmental loans with no tax liens, recent charge-offs or settlements, and no bankruptcy or foreclosure proceedings in the previous three years.
Commercial Real Estate Loan
The Commercial Real Estate Loan offered by the SBA is typically a loan in the amounts of $500,000 to $5 million. For a business to qualify for this loan it must have been in operation for more than three years. At least 51 percent of the property purchased with this loan must be used by the business applying for the funds. There can be no defaults or delinquent payments on loans financed by the government. Three years of tax returns and other financial statements must prove that the business and personal finances have enough incoming capital to maintain payments of all debts. Additionally, the business owner must have a personal credit score that is 675 or higher.