Many people think the Small Business Administration (SBA) makes loans. In fact, the SBA doesn’t lend money, it administers programs that guarantee business loans—similar to those of an insurance policy, which removes much of the risk from the lender in case of default. While the SBA backs loans under several programs, most SBA loans are administered through the 7A program or the 504 program.

Under the SBA 7A program, the U.S. government offers the lender a guarantee on a business loan if the lender adheres to certain rules. The 7A program has a $5 million maximum guarantee with up to 25 years amortization and up to 90% loan-to-value ratio. The program offers an adjustable floating interest rate based on prime plus a spread, with a maximum rate of 2.75% over prime.

The 7A program also has rules and limitations, including a 1.20 cash flow requirement and a prepayment penalty of 5%, 3%, and 1%, respectively, in each of the first three years of a long-term loan. Short-term loans do not have a prepayment penalty.

If you want an SBA 7A loan, your challenge is to find a bank that funds the type of loan you’re looking for. Or, simply call Caneel Capital, and we’ll match you with a lender in no time.

SBA 504
The SBA 504 program is typically used for commercial real estate loans. Loans made under the 504 program require as little as 10% down, allowing you to lock in occupancy costs for the long term, with financing tailored to your needs. You’ll also reap tax benefits and appreciation on the property and, with up to 90% of the project cost financed, you can conserve working capital and retain liquidity to meet operational needs.

The 504 program offers 20-year, fully amortized financing so you can pay over the long term and avoid risky loan call provisions. And the low, monthly payments can help you build equity and wealth. Contact us today to find a lender for your SBA 504 business loan.


©2010-2014 Caneel Capital. All Rights Reserved.

Designed by: Be Creative Studios