What Is the Maximum SBA Loan Amount I Can Get?
If you’re looking to get some financing for your small business, SBA loans are a great option to consider. But with different loan types and limits, it can get confusing figuring out exactly how much you might qualify for. Let’s break it down so you know what to expect.
SBA 7(a) Loans – The Most Common Type
The most popular loan program from the SBA is the 7(a) loan. This loan can be used for a variety of business purposes like purchasing real estate or equipment, refinancing debt, or financing working capital.The maximum amount you can borrow with a standard 7(a) loan is $5 million. Now that’s the total loan amount – the SBA will guarantee a portion of that, up to $3.75 million.There are some specialized 7(a) loans that have different limits though:
- SBA Express loans cap out at $500,000 with a 50% SBA guarantee
- Export Express loans go up to $5 million with a 90% government guarantee
So if you need more than $500k, the basic 7(a) loan would likely be your best option from the SBA.
What Factors Determine SBA Loan Eligibility?
When applying for an SBA backed loan, there are a few key criteria the lender will evaluate to determine if you qualify:
- Your business must operate for profit – Non-profits and charitable organizations do not qualify for SBA lending programs.
- Good personal credit history – While requirements vary by lender, a credit score above 680 will improve your chances of approval.
- Sufficient equity investment – You’ll need to inject 10-20% of the total project costs from your own funds. This demonstrates commitment to the business.
- Ability to repay the loan – The lender will review your business plan and financial projections to determine if your expected cash flow is adequate to handle the loan payments.
As long as you meet these baseline requirements and have a financially sound business, you may be eligible to qualify for the maximum $5 million 7(a) loan amount.
What’s the Maximum Amount I Can Use for Real Estate?
If you’re looking to purchase commercial real estate for your business with an SBA 7(a) loan, there are limitations in place:
- The maximum loan amount for real estate acquisition is $5 million
- Of that, only $750,000 can be used for construction, renovations, or equipment related to the property
The remaining portion must be used to finance the acquisition of land and/or existing structures.These limits apply to financing a single real estate project. If you have multiple locations, you could potentially get separate loans for each up to the $5 million individual cap.
Can I Get Multiple SBA Loans?
If the first SBA loan you get for your business reaches the maximum amount, you may be wondering if you can get another one.The short answer is yes – with a few specific guidelines:
- Each loan must be for a separate project or business purpose
- There must be sufficient equity invested from your own capital
- The total outstanding SBA loan balance cannot exceed $10 million
So you could potentially get two $5 million 7(a) loans for a total of $10 million in financing. This would require 20-25% equity down to meet the above requirements.Getting approved for multiple loans requires demonstrating to lenders you have the financial capacity and cash flow to take on the additional debt. But it provides a pathway to secure more capital as your small business grows and expands.
What’s the Easiest SBA Loan to Qualify For?
If you’re worried about getting denied for an SBA loan, there are some loan programs that are easier to get approved for:SBA Express – With a streamlined process, these loans max out at $500,000 and have a lower 50% guarantee requirement.SBA Community Advantage – These loans also require just a 50% personal guarantee for financing up to $250,000.SBA Microloans – With loans up to $50,000 from non-profit lenders, these have flexible qualification standards.So while the maximum amounts are lower, it may be wise to start here if you have limited operating history or credit challenges. Once you build your track record with a smaller SBA loan, you can potentially graduate to the higher loan limits later on.
Can I Get an SBA Loan for an Existing Business?
If you already have an established, operating business, don’t think you’ve missed the boat for securing an SBA loan.In fact, existing businesses with a couple years of financial history can have an easier path to getting approved. Lenders will be able to evaluate past revenue trends and cash flow to gauge repayment ability.Just be sure you have sufficient equity in the business to meet the down payment requirements – typically 20-25% of the total project cost.As long as you’ve been running your business responsibly and have strong finances, you could still qualify for up to $5 million in financing. An SBA loan can provide growth capital to help take your business to the next level.
How Much Do I Need for the Down Payment?
To qualify for an SBA 7(a) term loan, you’ll need to inject some of your own capital for a down payment. This helps demonstrate you have “skin in the game” and won’t just walk away if things get tough.The equity investment requirements are:
- 10% down for loans up to $500,000
- 15% down for loans between $500,000 – $1,500,000
- 25% down for loans above $1,500,000
So if you get approved for the full $5 million maximum SBA loan amount, your minimum down payment would be $1,250,000 – representing 25% of total project costs.Coming up with that much liquid capital is no small feat. But the more you’re able to put down from your own funds or investors, the better the loan terms you can qualify for.
What Else Do Lenders Look For?
When deciding whether you qualify for an SBA loan, lenders will dig deep into your business operations and finances. Be prepared to provide ample documentation including:
- Several years of tax returns and financial statements
- Projections and assumptions demonstrating repayment ability
- Business plan detailing operations, management, and target markets
- Collateral to secure the loan like real estate, equipment, inventory, or receivables
The more professional your presentation and thorough your paperwork, the better your chances of approval. It demonstrates you run your business responsibly and will effectively deploy the capital injection from the SBA loan.If you have gaps in any areas, be proactive in addressing them. That might involve bringing on a key management team member, developing financial reporting processes, or structuring a detailed expansion plan.With the right preparation and foundation, your business can merit the SBA’s maximum $5 million loan.
What Should I Know About SBA Loan Rates?
A big advantage of SBA loans over conventional financing is access to low fixed interest rates. Exact rates vary between lenders but will typically fall between 6-8% for smaller loans.On larger loans above $50,000, rates can be even lower – in the 3-4% range.Rates are also based on factors like your personal credit score, industry risk levels, and current market conditions.Small business owners should run the numbers to see if it makes sense to refinance existing debt with an SBA loan at a lower rate. Just keep variable rate loans below the SBA’s rate caps.
How Long Do I Have to Repay an SBA Loan?
A nice benefit of SBA financing programs is flexibility on repayment terms. 7(a) loans allow borrowers between 10-25 years to pay back the obligation.The actual loan maturity will depend on:
- Total loan amount – Larger loans can qualify for longer terms
- Use of funds – Real estate can get up to 25 years, equipment 10-15 years
- Projected cash flow – Enough net profit must cover payments
Work with your lender to structure the right loan duration that matches up with your financial forecasts. A longer term reduces annual payments but increases total interest paid over the life of the loan.
Where Should I Apply for an SBA Loan?
Over 1,800 lenders across the country participate in SBA lending programs – from national banks to local community institutions.The SBA provides loan guarantees, but does not directly finance small businesses. You must apply through an approved SBA lender.To find one convenient for you, check out the SBA Lender Match tool. Simply enter your business zip code and loan amount to get matched with potential lenders.You can also check directly with banks you have existing relationships with to see if they handle SBA loans. If not, ask if they have partner institutions they work with that do.
Am I Guaranteed to Get Approved for an SBA Loan?
While the SBA will guarantee 75-90% of an approved loan amount, the lender is the one who makes the final decision on your application.So approval is never 100% guaranteed – they must assess repayment ability and will likely deny those deemed high risk.To boost your chances, put your best foot forward with a solid business plan, adequate capital injection, and strong personal financial history.Also apply with multiple lenders as each has their own qualifying metrics. Cast a wide net so if one lender denies your application, others may still approve. The SBA provides excellent financing options, but their maximum $5 million loan limit puts your business growth potential on a leash.Once you reach that threshold, consider expanding your search to alternative online lenders. Options like Funding Circle Term Loans go up to $500 million to fuel your small business beyond borders.