Get an SBA Guarantee for Your Business Loan
The Small Business Administration (SBA) guarantees loans made to small businesses, such as the one you want to start or buy. Your loan is made by a bank or other SBA - approved lender. The SBA does not make the loan itself; instead it guarantees a large portion of your loan. Hence, your lender is happy to make your loan. Why? Because if you fail to repay, the SBA repays your lender. It’s a win - win for your lender.
Four types of SBA loan guarantees could help you get your business loan faster today. The four guarantees you should look into for your business loan are:
The basic 7(a) loan guarantee that can go as high as $ 2 million with a fixed or variable interest rate. For your working capital loans, the maximum term (duration) of your loan will be 7 years. Loans for your business equipment, such as machinery, and for your business real estate have a maximum term of 25 years. The interest rate on these loans is tied to the prime rate. The 7(a) loan is great for a business in which you have a factory and machinery.
The SBAExpress loan guarantee covers your business loans up to $ 350,000 and can be for a revolving line of credit. The turnaround time for your decision (yes/no) is 36 hours — hence the name Express. These loans are made for a variety of business purposes.
The SBA Microloan Program provides guarantees for your business loans up to $ 35,000, with the average loan being $ 13,000 at this writing. Loans are made to you by local lenders, with the decision being made by your lender.
LowDoc Loan guarantees are for loans requiring a minimum of paperwork (usually just one sheet on two sides). Such loans are usually smaller than the 7(a) loans and are made for your business start-up or purchase.
You must, of course, qualify for any SBA - guaranteed loan. But most lenders will be more considerate of you when you apply for an SBA - guaranteed loan because the lender has the solid security of the government guarantee on most of the loan.
SBA makes a number of other loan guarantees. These include Export Working Capital Loans, International Trade Loans, Export Express, and many others. You should look into the many loan guarantees available to you by calling the SBA at 1 - 800 - 827 - 5722, or go to the SBA web site at www.sba.gov. You can also contact a local SBA offi ce in your area. See your telephone “ Government ” pages for its location and telephone number.
My company, IWS, Inc., buys the guaranteed portion of SBA loans as an investment. Why? Because the interest rate is higher than for certifi cates of deposit (CDs). Further, the government guarantees repayment of the loan!
If you’re interested in having us buy the guaranteed portion of your loan (through a brokerage house), you might find it encourages your lender to make the loan to you. Call me to discuss. You’ll fi nd full information on how to contact me in the last paragraph of Chapter 8.
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