SBA Loan


If you need financing, the chances are that you may have approached a bank already, only to have them turn down your request on some ground or the other. They mainly look at your ability to repay the loan, and if you have an adverse credit history, things do not work out in your favor.

At Sapphire Financial, we know it is not your fault. The economy has been sluggish for years now, and falling oil prices haven’t helped. Weak market conditions make investors even more wary, leading to a situation where legitimate businessmen require operating capital to expand and propel the economy forward, but can’t find enough because of the current scenario.

At a Glance

Under the U.S. Small Business Administration’s various “SBA loan” programs, you can borrow money for nearly any business purpose—including adding to working capital, purchasing inventory or equipment, refinancing other debts, buying real estate, or even funding the acquisition of other businesses.

Next Loan Type:

AmountMaximum Loan Amount

$5,000 – $5 million

TermLoan Term

5 – 25 years

RatesInterest Rates

6 – 13%


As little as 30 days

The way forward

We are committed to helping small businessmen, one loan at a time. We take a holistic view of your business, viewing it from several angles that other don’t take the effort to see; in order to understand your proposed business model. We are backed by private capital, but that doesn’t make us loan sharks. Our terms are as favorable as any other.

In fact, they are way better.

What is an SBA loan?

It is a loan that is partially guaranteed by the Small Business Administration using federal money. This way, there is more incentive to lend to small businesses, and less strict criteria than banks or other lending institutions.

General Small Business Loans

This is meant for specific business needs. You can use it for setting up a new business, acquiring an existing business or simply expanding your existing one(s). It can also be used for purchasing real estate, financing construction, implementing pollution controls, buying materials, supplies, machinery, furniture or stock/inventory. It can be used for short-term capital requirements and there are very few restrictions, such as it not to be used to paying existing debt or selling the business – in short, anything that can prevent you from not doing business.

You could expect to receive up to $5 million as a General Small Business Loan. The Small Business Administration stands as a guarantor for 85% of the loan if it is less than $150,000. For anything more than this, the SBA guarantees 75% of the amount.

What about the rates of interest? Will they be higher, considering that the loans are guaranteed by the United States Government?

The exact rates of interest depend on the amount and duration of the loan. Because the Small Business Administration is involved, acting as a guarantor on behalf of the applicant, there is a cap on the maximum interest rate that can be levied.

The maximum any lender can charge for an SBA loan is the base rate (as prevailing on the first day of the month the loan application is made) plus a spread of up to 2.75%. If the loan is of seven years or less, the maximum allowable spread is limited to 2.25%.

Typically, a General Small Business Loans or 7(a) loan as it is called in short, would carry an annual interest that ranges between 6% and 13%.

So you can see for yourself why it is in your best interests to secure an SBA loan.

Will a General Small Business Loan take time to be approved?

If you are in urgent need of capital, you can apply for an Express Loan. Your loan application will be considered immediately and a decision is assured within the next 36 hours.

*The maximum loan amount that can be given under this program is $350,000 and for not more than seven years. The Small Business Administration stands as a guarantor for 50% of the loan, and the lending institution may charge a maximum spread of 4.5% if the loan amount is $50,000 or less. In case it is higher than this, the maximum spread allowed is 6.5%.


This is what you should opt for if your requirement is less than $50,000. The average micro-loan amount available works out to around $13,000 and you can take up to six years to repay a microloan.

The best part is, a microloan comes with free business training / planning assistance as part of the package.

Disaster Loans

If your machinery/equipment and/or inventory have sustained damage or been destroyed in a disaster, the Small Business Administration also provides you low-interest disaster loans to help you repair/replace them. The loan can be used in the case of damage/destruction to real estate, business assets and/or personal property.

Business Physical Disaster Loans: You could expect to receive up to $2 million.

Military Reservists Economic Injury Loans: If one or more of your employees is a military reservist and has been called up to active duty, you could receive up to $2 million, provided he/she/they are ‘essential’ employees and your business will be hit hard by their absence. The maximum interest rate that can be charged is 4%, and the loan can be availed for up to 30 years.

Economic Injury Disaster Loans: Sometimes, it may happen that you cannot operate your business owing to a disaster having struck the area, such a flood or hurricane. This is likely to result in economic hardship, and you can avail of a loan of up to $2 million* to meet your cash flows until everything returns to normalcy. You can apply for this even if your property hasn’t sustained any damage. The maximum interest rate that can be charged is 4% and you can take up to 30 years to repay the loan.

*If you apply for a Business Physical Disaster Loan as well, please note that the maximum disaster loan permitted is $2 million in total.

Real Estate & Equipment Loans

To deter large businessmen, only those with a net worth of up to $15 million and a net annual income that does not exceed $5 million after taxes (as determined from the past two years) can apply.

There are three parties involved in a Real Estate & Equipment Loan, otherwise called a CDC/504 Loan. The CDC stands for Certified Development Company, and there are 270 of them across the United States. You need to contribute 10% of the loan, while a lender furnishes 50% and the Certified Development Company puts up the remaining 40%. Certified Development Companies or CDCs are non-profit organizations whose objective is to spur economic development in the area. The loan is guaranteed by the Small Business Administration, and in case of a default, the lender is repaid first. This reduces the risk for lending institutions like, and makes lenders very receptive to small business owners, even when a loan amount of this size is being considered.

The rates of interest are also below par, or less than the prevailing market rates – it was 4.931% a few years ago, and it generally depends on the 5-year and 10-year U.S. Treasury Yield.

Up to $5 million can be sanctioned as a loan, provided you retain or create one job for every $100,000 you avail. If you are into alternative fuels, energy reduction or fulfilling public policies*, you could get up to $5.5 million. This can be repaid in either 10 or 20 years.

*Public policy goals include increasing exports, minority business development, revitalization of the business district, expanding businesses controlled and owned by women and veterans (if they have disabilities that they have sustained during service, your project gets more priority), development of rural areas, productivity improvement measures, and restructuring / changes because of changes in federal policy or budget cuts.

You can use the loan amount for buying real estate (both vacant land as well as buildings) or making improvements, such as landscaping, construction of parking lots, grading, or installation of utilities. Existing property can also be modernized, renovated or converted. New facilities can also be built with this money. Long-term machinery and/or equipment may also be purchased with this loan.

What it cannot be used for is repaying existing debt, or speculation in real estate. It may not be used towards purchasing/adding stock/inventory or as working capital.

Your company also needs to be operated as a for-profit institution, and the money is meant for doing business in the United States. So part of it cannot be used for financing business operations overseas. Additionally, you also must not have access to other sources of funding. You are also not eligible for the CDC/504 Loan if you or your business already has enough financial resources.

The SBA loan advantage

Most businesses are eligible for SBA loans. The only ones that are ineligible are those into finance (banking, lending, leasing, insurance, loan packaging), dealing with rare coins and stamps, pyramid selling, gambling, real estate companies which invest in property, speculation such as commodities futures, non-profit organizations (this also includes charitable and religious institutions), multi-sales distribution, and of course where the activity is illegal.  You can also get an SBA loan for a startup company.

Those out on parole are not eligible to apply.

Keep in mind that for every type of SBA loan, you need a feasible business plan. This should include whether or not you plan to use your personal finances, and a list of your assets, liabilities and equity or net worth of your company. Preparing financial statements requires a knowledge of basic bookkeeping, but this is essential for you to run your company profitably. This is where the free business training offered when availing of a micro-loan can come in handy (the training is a prerequisite, meaning you need to take it before actually getting the loan – this can help you submit a feasible business plan as part of the SBA loan application process).

The business plan should also mention projected cash flows and contain a breakeven analysis, that is, at what point of time you expect to be making profits if everything goes according to plan.

Confused? Just get in touch with us. At Sapphire Financial, we understand small businesses like no other. We know that every business has its own needs and operates in a unique business environment. Our team of professionals are committed to help you determine exactly how much money you need, and make an application compliant with SBA guidelines so that there is little chance of it getting rejected. We assist in such a way that your loan application gets approved.


SBA Loan Advantages & Disadvantages

Lowest down payments

Longest payment terms

Reasonable interest rates

Suitable for a wide range of business purposes

Lengthy paperwork

Longer approval times

May require collateral

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