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An SBA loan in New Hampshire is a small business loan offered by banks and lenders. Partly guaranteed by the U.S small business administration. SBA loans have tight lending standards and requirements. However their extremely flexible rates and terms can make them one of the best ways to finance your New Hampshire business. There's a few different types of SBA loans available: 7a, 504, micro, disaster, etc. So feel free at any time to fill out the form or give us a call to explore your options.
There are multiple types of SBA loans available. Each SBA loan program comes with its own terms and conditions. They also each serve different purposes, this all depends on what you use the funds for.
|SBA 7(a) loans||Up to $5 million||Working capital, expansion and equipment purchases|
|SBA Express loans||Up to $1 million (drops to $500,000 on Oct. 1, 2021)||Fast funding for working capital, expansion and real estate and equipment purchases|
|SBA 504 loans||Up to $5.5 million||Purchase long-term, fixed assets like land, machinery and facilities|
|SBA microloans||Up to $50,000||Working capital, inventory, supplies, equipment and machinery|
|SBA disaster loans||Up to $2 million||Repair physical damage due to a declared disaster and cover operating expenses|
|SBA Community Advantage loans||Up to $250,000||Normal business purposes; cannot be used for revolving credit|
|SBA export working capital loans||Up to $5 million||Working capital to support export sales|
|SBA export express loans||Up to $500,000||Expedited funding to enhance a business's export development|
|SBA international trade loans||Up to $5 million||Long-term funding to expand export sales or modernize to contend with foreign competitors|
7(a) loans tend to be the most common within the SBA family of loans. With access to up to $5 million in working capital for a term of 25 years, numerous industries find that these types of loans are undoubtedly adequate for their needs. Interest rates tend to be between 7-8% depending on trade and the nature of your New Hampshire based business. Most who go for an SBA loan will fall under this 7(a) category
Express SBA Loans can range from $20,000 to $350,000 for up to 10 years with an average interest rate of 7.5% APR.
504 loans are extremely specific. For example, if you are looking to purchase commercial real estate in New Hampshire or perhaps a large piece of equipment, then this might be the program you fall under. The borrower may need to provide up to 20% of the total value, with the SBA kicking in 40% and the lender the rest. The cap on this type of loan is generally $5 million.
An SBA Express loan is for funding up to 350k. These are suitable for small businesses and newer companies. SBA Express loans are funded in as little as two weeks. The funds can be used for working capital, inventory, to supplies. It cannot, however, be used to purchase real estate.
At First Union Lending, we make the process super simple and fast. If you pass our initial qualifications, there is a 90% chance of completing the process and having the loan fund.
The advantages of SBA loans really boils down to a few key areas. How expensive the loan is and what you need to be approved for it. What you can do with the cash and how you set yourself up to repay it. All of these come down to how your business grows. Which the SBA helps with, too. Above all else, the advantages of SBA loans set up businesses to do what the small business administration is set out to do. Make your New Hampshire business succeed.
Let's keep a few things in mind. Not every small business loan is a fit for every small business owner. That includes SBA loans, as great as they are. Some business owners need cash faster than SBA loans can allow for. Other business owners can't provide all the paperwork these intensive applications require. In these cases, that's okay. You can always circle back to SBA once you build up your business history and credit.
For businesses that do not qualify for other small business loans, SBA loans are a great option to explore. There are quite a few benefits of them from low interest rates, repayment terms and flexibility of use. Let's dive into some of these benefits of a SBA loan.
Per federal rules, participating lenders base SBA loan interest rates on the prime rate plus a markup rate known as the spread. Note that the APR on a loan is different from the interest rate. The APR is a percentage that includes all loan fees in addition to the interest rate.
APRs can vary substantially between SBA lenders and non-SBA lenders. For example, an online lender that specializes in SBA loans may cap its APR around 10%, while major online small-business lenders that don't offer SBA loans have loans with APRs as high as 99%.
Fees for SBA loans usually consist of an upfront guarantee fee, based on the loan amount and the maturity of the loan, and a yearly service fee, based on the guaranteed portion of the outstanding balance. The SBA reassesses its fee structure each year.
Fees for SBA loans are currently being waived
Another perk of SBA loans is that you get more time to repay them, which means you'll have more money available for other business needs. The loan term will depend on how you plan to use the money. The current maximum maturities are:
Some types of business loans have terms which dictate how you should use up the funds allocated. It's essential to have a plan when borrowing a loan, even with SBA loans, but sometimes business owners just need money. You can use an SBA loan for literally anything. That flexibility has a sense of freedom that allows you to even refinance existing debt, make upgrades, buy new land and much more.
SBA loan requirements vary based on the lender and the individual loan program. However, regardless of your loan program or SBA lender. You'll need to meet a standard list of eligibility requirements, including:
Must be physically located and doing business, or proposing to do business, in the U.S or its territories.
As a business owner, you must have invested equity — such as time or money — into the business.
Must be a small business, as defined by the SBA. The definition of small varies by industry and is generally stated in the number of employees or average annual receipts. The SBA offers an interactive tool that helps you determine whether you meet this requirement.
The SBA doesn't set numerical minimums for evaluating your creditworthiness, but lenders are required to analyze your application to make sure you'll be able to repay this government business loan.
Here's what a lender will likely use to evaluate your eligibility for an SBA loan:
You'll typically need to have good credit — a score of 690 or higher. Again, the SBA does not designate a credit score minimum, so you may have some flexibility depending on your lender and other qualifications.
Similar to your personal credit, you'll want to have a solid business credit history. In many cases, the SBA uses the FICO Small Business Scoring Service, or SBSS, to evaluate your business credit history and prescreen 7(a) loan applications.
Currently, you'll need to receive a score of 155 or higher to pass the prescreen — scores range from 0 to 300. Even if you don't pass the prescreen, a lender can choose to continue with your application. However, lenders may also set their minimum accepted SBSS scores higher than the SBA minimum.
Although some lenders will work with newer businesses, most will require that you have two or more years in business.
You'll need to show strong annual revenue and cash flow projections. You shouldn't have too much existing debt that you can't afford to take on this additional financing. You'll want to have a debt service coverage ratio (also known as DSCR) — which compares your available operating income to your current debt obligations — of 1.15 or higher.
For many SBA loan programs, lenders are required to obtain collateral to fully secure loans, when possible. Acceptable forms of collateral include real estate, equipment and inventory. Lenders cannot, however, deny loan applications solely based on lack of adequate collateral.
To submit your SBA loan application, you'll be asked to provide extensive documentation. Some of these requirements will vary based on your lender and loan program, but here are the most common documents and forms you'll need to provide:
If you are using your SBA loan to purchase an existing business or purchase real estate, you'll have additional application requirements, such as purchase agreements and appraisals or business valuations.
Some SBA loan programs have unique requirements. The SBA 7(a) loan program covers several different loan types. Requirements are fairly standard across 7(a) loans, with some exceptions. For example, SBA CAPLines of credit must be used for short-term or seasonal working capital needs.
There are four types of credit lines: Seasonal CAPLine, Contract CAPLine, Builders CAPLine and Working CAPLine. Borrowers must meet requirements related to the use of proceeds (e.g., be able to show a pattern of seasonal activity) in addition to the standard 7(a) requirements.
SBA 504/CDC loans can be used only to fund fixed-asset purchases, such as real estate and large equipment. The SBA also requires that any real estate you purchase with this financing is 51% owner-occupied — and 60% owner-occupied for new construction.
SBA microloans, on the other hand, can be used for a variety of purposes, but cannot be used to pay for existing debts or purchase real estate. These smaller loans are issued by intermediaries — like nonprofit community organizations — and may have more flexible eligibility criteria compared with other SBA lenders.
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