What is an SBA Loan?

It’s a common misperception that the SBA lends money to small business owners. In fact, SBA loan programs are not loans. Instead, the SBA develops guidelines for loans, which are then made by SBA-approved lenders (like First Bank SBA). The SBA also guarantees that these loans will be repaid, alleviating the risk that a lender might otherwise take. This is good news for business borrowers who’ve struggled to secure a bank loan in the past due to strict criteria and high down payments.

The SBA has developed a range of loan programs that meet key financing needs such as debt refinancing, long- and short-term working capital, real estate financing, and more.

The most popular loan program is the 7(a) loan program. 7(a) loans can be used to start a new business or to acquire, expand, export, and more. If you’re looking to expand through investments in land, buildings, improvements, or other major assets, another loan – the CDC/504 program – provides long-term, fixed-rate financing up to $5 million.

For businesses seeking to refinance debt, the 504 loan program provides long term fixed-rate refinancing on up to 90% of current appraised property and other business expenses.