SBA Loans

Although it is a common misperception; the Small Business Administration does NOT make loans. They do, however, provide loan guarantees to enable banks to make riskier loans. The two most commonly used SBA programs are the 7(a) and the 504.

SBA 7(a) Loan Guarantee. The Small Business Administration (SBA) guarantees approximately $12 billion in loans annually. A bank or commercial lender can get 80% of the principal (up to $1 million) guaranteed for terms up to 10 years. These loans are frequently used for purchasing equipment or purchasing a business. The guarantee helps the borrower overcome a weak loan application from inadequate collateral or short operating history.

See also - SBA 7(a) Loan Guarantee.

SBA 504. The 504 Loan Program provides long-term, fixed-rate financing for major fixed assets, such as real estate, facilities construction or expansion, or other fixed-asset needs, like long term capital equipment. Loans are available for up to $1 million for up to 10 years on equipment and 20 years for real estate.

504 loans are made through Certified Development Companies (CDCs) working in conjunction with a private lender. Originally regional in nature, the six CDCs in Iowa operate statewide.

See also - SBA 504

A list of Iowa CDCs