SBA loans, explained plainly.
An SBA loan is a small business loan made by a bank, credit union or other lender, with part of it guaranteed by the U.S. Small Business Administration. The guarantee lowers the lender's risk, which can mean longer terms and lower down payments than a conventional loan. The trade-off is more paperwork and a longer review.
Full Port Financial is not a lender. Financing is provided by third-party funding partners.
See whether an SBA loan may fit
No fee, and checking your options won't affect your credit. Full Port Financial is not the SBA and is not a lender.
- Tell us the basics. Under a minute here, then a few more questions on our secure application.
- An advisor reviews it. They tell you which funding partners may fit, or tell you straight if none do.
- You choose. Partners see an anonymous summary only if you approve them by name.
- Rather talk? 1-800-MYMONEY. A real person answers.
What SBA loans are
The SBA does not lend money directly to most businesses (disaster loans are the exception). Participating lenders make the loan, set many of its terms within the SBA's rules and decide whether to approve it. The SBA's guarantee covers part of the lender's loss if the loan is not repaid, so it protects the lender, not the borrower. You still owe the full amount.
There are three main programs. 7(a) loans are the most common and can be used for working capital, equipment, real estate, refinancing debt or buying a business. 504 loans finance major fixed assets such as buildings and long-life equipment, through a lender and a nonprofit Certified Development Company. Microloans are smaller loans made through nonprofit intermediaries, often with business coaching. The SBA publishes each program's current limits and fees on SBA.gov.
Full Port Financial is not the SBA and is not affiliated with, endorsed by or acting for the SBA or any government agency. We are not a lender. We help you understand whether an SBA loan may fit and, with your permission, introduce you to participating lenders among our funding partners. Using us is optional: you can also go to an SBA lender yourself or use the SBA's free Lender Match tool at SBA.gov.
Often used for
- Buying commercial real estate for your own business
- Buying an existing business or a partner's share
- Long-term working capital for an established business
- Major equipment with a long useful life
- Refinancing more expensive business debt, when it qualifies
- Owners who can wait for a longer, more detailed review
This guide explains how SBA loans generally work. It is not an offer. Our funding partners may offer this product, but Full Port Financial may not have a partner for every product in every state, and any terms come from the funding partner.
The terms that matter
A participating bank, credit union or other lender makes and services the loan. The SBA guarantees part of it under its program rules.
Usually monthly payments over a longer term than most business loans. The term depends on the program and on what the money is for.
Owners of 20% or more generally sign a personal guarantee, and for most larger loans the lender must take available collateral, which can include personal real estate. SBA loans are generally not unsecured.
The SBA sets maximum interest rates and guarantee fees for each program. Ask the lender for the rate, every fee and the total repayment in writing.
What funding partners usually look at
Every funding partner sets its own requirements. These are the factors that come up most often.
- A for-profit business operating in the United States that meets the SBA's size standards
- Operating history, since most lenders want to see a track record
- Good personal and business credit, with no recent defaults on government debt
- Enough cash flow to repay the loan
- Owner equity in the business or project, especially for purchases
- That the loan is not available on reasonable terms from other sources, which the lender confirms
What to have ready
You don't need these to make the first call. Having them ready later speeds things up.
- Your last 3 months of business bank statements
- A driver's license or passport
- A voided business check or bank letter
- Proof of ownership: your Schedule K-1 or IRS EIN letter
- 2 to 3 years of business and personal tax returns
- A year-to-date profit and loss statement and balance sheet
- A personal financial statement for each owner of 20% or more (the lender provides the form)
- A debt schedule listing what the business currently owes
- For purchases: the purchase agreement, property details or seller's quote
Understanding what it really costs
An SBA loan's cost is the interest rate plus fees. Rates are often variable and tied to the prime rate, within maximums the SBA sets. Most 7(a) and 504 loans also carry an SBA guarantee fee, and the lender may charge closing and packaging costs. Ask for the APR, the total amount you will repay and every fee in writing before you sign.
If a lender pays Full Port Financial for introducing you, that payment is disclosed on SBA Form 159 (Fee Disclosure and Compensation Agreement), which you will see and sign. Full Port Financial does not charge applicants a fee.
From first call to an offer, if a partner approves.
Tell us about your business
Your industry, your revenue and what the money is for. A few minutes on the phone with a funding advisor.
Compare your options
See options from funding partners that fit your profile, side by side, with your advisor walking you through them.
Choose and sign
If a partner approves, choose the offer that works for you and sign the funding partner's own agreement.
Questions, answered.
Does the SBA lend me the money?
Usually not. A participating bank, credit union or other lender makes the loan and decides whether to approve it. The SBA guarantees part of the loan to the lender. The SBA lends directly only in a few cases, such as disaster loans.
Is Full Port Financial part of the SBA?
No. Full Port Financial is a private company. We are not the SBA, we do not act for any government agency and we are not a lender. We help business owners understand their options and connect them with funding partners, including participating SBA lenders.
Do I need collateral or a personal guarantee?
Usually, yes. Owners of 20% or more generally sign a personal guarantee, and for most larger loans the lender must take available collateral, which can include business assets and equity in personal real estate. If you need financing without collateral, an SBA loan is probably not the right fit.
How long does an SBA loan take?
It varies widely by lender, program and how complete your file is. SBA loans generally take longer than other business financing because of the extra paperwork and review. Having your documents ready helps.
Can a newer business get an SBA loan?
The SBA has no single time-in-business minimum, but most lenders want an operating history. Business purchases and startups can sometimes qualify with a strong plan, relevant experience and owner equity. We will tell you honestly whether it is worth applying.
Will checking my options affect my credit?
Talking with Full Port Financial does not affect your credit, because we do not pull credit reports. A lender may review your credit later as part of its own review, with your permission.
Does Full Port Financial charge a fee?
No. Full Port Financial does not charge applicants a fee to apply or to talk with an advisor. If a lender pays us for an introduction on an SBA loan, that is disclosed on SBA Form 159 before closing.
Related guides
Talk it through before you decide.
Tell us about your business and what the money is for. An advisor will walk you through the options that may fit, with no pressure and no obligation.