The right SBA loan program for you

Guest post by Richard Gray

There are many different types of Small Business Administration loans to help businesses get financing. On one hand, the many different programs make it possible for different types of companies to get what they need. On the other hand, the many different programs can make it tough to know which one is the right fit for your business.

The SBA is a government-sponsored organization that has been around for 60 years with the mission of helping Americans start, build and grow businesses. If you qualify as a small business (you can find the definition for your particular industry type at,

Of course, it’s important to find a lender with enough experience to help you navigate the best option for financing for your business, but here are some basics to help you start wrapping your head around the SBA programs that may be available to you.

The 7(a) Loan Program is the SBA’s primary and most flexible loan program. This program allows commercial banks to make the loan, but guarantees partial repayment in the case of default. This guarantee makes banks more likely to loan money to seemingly high-risk small businesses like those that

• Have less cash for the down payment than banks normally require.

• Have a short operating history.

• Require a longer-term loan than banks normally provide.

• Need financing for very specialized equipment or unusual financing needs.

The 7(a) program is designed for start-ups and small business that want to grow and is delivered through commercial lending institutions. Within the 7(a) program, there are actually different types of loans that cater to specific needs. Of course, each of these has different characteristics and qualifications, but the following might be a good start.

If you need a loan under $350,000, the Small Loan Advantage program is similar to the regular 7(a) program, but covers smaller loan amounts and has a streamlined application process.

If you need a revolving line of credit or term loan of $350,000 or less, you might want to ask your lender about the SBAExpress. The specific benefits to borrowers this program includes are faster turnaround, streamlined process and easy-to-use line of credit.

If your small business is owned and controlled by one or more of the following groups: veteran, active-duty military in TAP, reservist or National Guard member or a spouse of any of these groups, or a widowed spouse of a service member or veteran who died during service, or a service-connected disability, you may be eligible for the SBA Veteran’s Advantage program, which doesn’t have a guaranty fee.

If you want to increase or start your international business, there are a few different types of Export Loan Programs that may allow your financial institution to make a safe loan while helping you to compete in the international marketplace, even as a small business. There are different types of export loan programs designed for businesses that need a fast turnaround, businesses that need to increase international business without disrupting domestic business or businesses that need longer-term financing.

If you’re in a rural area, look for an SBA lender that can offer rural business loans. The Small/Rural Lender Advantage initiative is designed to accommodate the unique loan processing needs of small, rural-based lenders.

The 7(a) program is very flexible and can accommodate a wide range of needs and businesses. However, because of this, there are times where a lender may use it as a default, when there could be a specialty program that would be a better match. Below are some specialty SBA-guaranteed programs for financing you can ask your lender about.

There are specialty lenders that can offer financing through the SBA’s Microloan Program. This program provides small (up to $35,000) short-term loans for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. It is designed for small businesses and not-for-profit child-care centers needing small-scale financing and technical assistance for start-up or expansion, and is delivered through specially designated nonprofit organizations with experience in lending and technical assistance.

The CDC/504 Loan Program provides long-term, fixed-rate financing to acquire fixed assets, like real estate. It is designed for small businesses requiring “brick and mortar” financing or equipment financing on equipment that has a useful life of ten years or more, and is delivered by Certified Development Companies—private, non-profit corporations set up to contribute to the economic development of their communities.

The Disaster Assistance Loan Program provides low-interest loans to individuals, businesses and organizations to repair or replace real estate, personal property, machinery and equipment, inventory and business assets that have been damaged or destroyed in a disaster. This program is accessed directly from SBA.

If you think one of these specialty programs might be what you need, visit to find out more and to find a lender.

Richard Gray is senior vice president of commercial lending and SBA lending at Bank of American Fork, Utah’s community bank leader, an Equal Housing Lender and Member FDIC. Richard also manages the bank’s Murray branch, and he has assisted local small businesses in obtaining SBA funding for more than 25 years. He served on the board of directors for nonprofit Kostopolus Dream Foundation and was the chairman for nonprofit Utah Microenterprise Loan Fund, Salt Lake City.

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