SBA Loan Programs in 2022 | ABC Biz Loans

SBA Loan Programs in 2022

What Are the Best SBA Loan Programs in 2022?

The U.S. Small Business Administration (SBA) is not a loan provider. It is a government-guaranteed entity that offers different loan programs.

Most small business owners all find themselves asking the same question at some point or another during their transition to becoming a business owner: Where will I get the money?

Many of them will ask that same question at some point again long after the transition period. The SBA offers many loan programs that can assist with a variety of business needs – from the different types of costs and requirements when opening your business, expanding your business, or simply keeping your business running smoothly.

Check out the chart below where we summarize the different programs.

 

List of Loan Programs
# NAME DESCRIPTION LOAN AMOUNT
1 GENERAL LOAN PROGRAM
  • The 7(a) loan program designed to financially assists businesses with special requirements such as operating in rural areas, employee trusts or exporting to foreign countries
  • Proceeds can be used for acquisition, expansion or operation of an existing business, or establishing a new business
  • Three main types of 7(a) loan programs: special purpose, export, and community advantage
  • lenders are not required to take collateral for loans up to $25,000
$5,000,000
2 Special Purpose Loan Program
  • Provides financial assistance to Employee Stock Ownership Plans
  • Provides aid for business affected by NAFTA or help implementing pollution control
  • The CAPLine program is designed to help small businesses with things like seasonal working capital needs and meeting short-term and cyclic work needs. The Employee Trust Program is designed to financially assist with Employee Stock Ownership Plans. The Community Adjustment and Investment Program (CAIP) is designed to assist U.S. companies that have been negatively impacted by the North American Free Trade Agreement. The Pollution Control Program is designed to aid businesses in reducing their environmental impact.
Varies by program
3 Export Loan Program
  • Provided to U.S. exporters and designed specifically to help exporters expand or develop their business
  • Funds can be used to enhance export development
  • To be eligible, a business needs to demonstrate that loan funds will aid in export activity, and the organization has been in operation for at least 12 months
$500,000 – $5,000,000 depending on loan program
4 Community Advantage
  • Designed to fit the need of small community or rural-based lenders by making the loan application process and procedures simpler and more convenient
  • Meant to promote economic development for small communities, especially those with high unemployment and economic dislocation
$250,000
5 MICROLOAN PROGRAMS
  • Assists women, low income, veteran, minority entrepreneurs and other small businesses in need of financing and other business-based technical assistance
  • Loans can be used for inventory and supplies, machinery and equipment, furniture and fixtures and working capital
  • Each lender required to provide business with technical assistance and provide training to borrowers
  • Borrowers may be required to undergo specific training or planning requirements before being approved for microloan financing
  • Average microloan: $13,000
  • Loan cannot be used for existing debt or real estate
$50,000
6 CDC/504 LOAN PROGRAM
  • Can assist small, for-profit businesses operating within the U.S. or its possessions with another avenue for business financing while encouraging job creation and business growth
  • Provides small business with long-term fixed rate financing to acquire fixed assets for modernization and expansion
  • Borrowers must have tangible net worth of less than $15 million and average net income of less than $5 million after federal income taxes for the two years preceding their loan application
  • 504 loans are available through Certified Development Companies (CDC)
  • CDCs are non-profit corporations that promote economic development within communities
  • Loans can be up to $1,000,000 and can be used for soft costs (non-construction costs such as engineering), land, building purchases, renovations or to purchase furniture and equipment
  • Loans cannot be used for working capital or inventory, consolidating, repaying, or refinancing debt, or speculation or investment in rental real estate
  • 10- and 20-year maturity terms available
$5,000,000

 

Subcategories & Additional Programs

There are  additional programs and subcategories to the classifications above.

Export Express Program: generates a response from the SBA within 24 hours for a credit line up to $500,000 for exporters.

  • Export Working Capital loans: for businesses that can generate export sales and need additional working capital to support these sales. These loans are a maximum of up to $5 million.
  • International Trade loans: provide long-term financing to businesses that are expanding because of growing export sales or that have been adversely affected by imports and need to modernize to meet foreign competition. Business can used International Trade loans for fixed assets for construction, building, real estate, equipment and for working capital for export transactions. The maximum loan is up to $5 million.
  • The Veterans Advantage: SBA loans made to businesses owned by veterans with reduced fees.
  • CAPLines is an umbrella program featuring four lines that helps small businesses meet their short-term and cyclical working capital needs.
    • Seasonal CAPLine: Borrowers can only use loan proceeds to finance seasonal increases of accounts receivable and inventory – or in some cases associated labor costs; can be revolving or non-revolving
    • Contract CAPLine: finances direct labor and material costs associated with performing assignable contracts; can be revolving or non-revolving
    • Builders CAPLine: can finance direct labor and material cost for a small general contractor or builder constructing or renovating commercial or residential buildings; can be revolving or non-revolving
    • Working CAPLine: asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit

What’s the Best SBA Loan?

You should take the time to do your own research and find out which loan program(s) is best for you. Consider the type of business you’re opening, the population you’re serving and so on.

Questions to ask yourself …

  • How much do you need to start? Or acquire? Or stay afloat?
  • How much is the interest?
  • What is the loan term?

All of these are good things to consider before signing off on the dotted line.

Where Will I Get the Money?

Securing SBA funding can be overwhelming. I’m quite sure just reading over the information above might be a little bit dizzying. But I promise you – the money is out there if you are willing to make the effort to find it.

If you would like assistance navigating the complicated SBA loan process, click or tap HERE for a free consultation.




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