Comprehensive Guide to SBA Loans


The US Small Business Administration (SBA) can make a difference in getting the money your business needs.

Many successful businesses reach a point where they need to borrow money. Your company may be growing rapidly, but if all your profits are reinvested in the company, you won’t have much to pay for the growth and expansion of the company, such as improved equipment, more raw materials, or new technology.

That’s when a business loan or line of credit can make a lot of sense.

However, securing a small business loan or line of credit can be difficult, even for a profitable business. Fortunately, a line of credit guaranteed by the US Small Business Administration (SBA) can help make a difference in getting the money your business needs.

SBA lines of credit are opened, underwritten and financed by various lenders, including PNC. The SBA guarantees a portion of the credit line, which means that if the borrower defaults, the lender can collect payment from the SBA under the SBA guarantee. This is called an “SBA guarantee.”

To be considerate, start at a bench. Your current bank may be the best place to apply for a line of credit because it’s probably already familiar with your company, but that doesn’t mean you shouldn’t also check out other banks in your area that may want to do business with you. Banks may suggest that you explore various types of credit products, including an SBA guaranteed loan, to meet your financial needs.

There are several types of SBA lines of credit that you can apply for; therefore, consider which one best suits your needs and situation:

  • SBA Express Loan. These lines of credit are for general business purposes, including the purchase of inventory, working capital, real estate, equipment, and expansion. You’ll get a response through a more streamlined process compared to a conventional line of credit, but the maximum loan amount is $350,000. These lines of credit provide flexibility depending on how you intend to use the money. An Express Line of Credit can be used for short-term cash flow needs, while Express Installment Loans offer more predictable monthly payments on equipment or real estate.
  • SBA 7(a) loan. These business lines of credit provide great flexibility and can be extended up to $5 million. The money you receive can be used for various purposes, including real estate, expansions and even to acquire other companies.
  • SBA 504 Loan. These lines of credit are specifically for the purchase or renovation of land or buildings, or the purchase of equipment.
  • Disaster Loan. These lines of credit are granted to companies that have been affected by natural disasters. If you are located within an SBA-declared disaster area and have been affected by a disaster, you may qualify for a line of credit to help repair or rebuild your business.

Once you determine what type of line of credit you should apply for, it’s time to start preparing your loan application. An application is much more than a couple of pages filled with your signature, it is a marketing proposal that explains why you need the money, how you will use it, and how you know you can pay it back (based on the success of the business).

Your loan application must include, at a minimum:

  • A business plan. Exactly how do you plan to continue developing and growing your business and how will you use the money? How will it help your company prosper? Can you show that your business is making money and can make more money if you had the line of credit?
  • credit history You will need to give permission for credit histories to be reviewed for you (personally) and for your company.
  • Tax records. You will need to provide up to the last three years of tax records for you and your company.
  • Financial statements. If you did not include three years of financial statements in your business plan, you will need to prepare them or have an accountant prepare them for the bank to review.
  • Personal guarantees. Each entity or person that owns 20% or more of the borrower must be willing to sign a personal guarantee for the line of credit, which means that even if the company fails, you will still be personally responsible for paying the line of credit.
  • Anything else the bank requests. For example, this could include additional specific forms from the SBA.


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