Generally, you do not need personal collateral for an SBA loan, but your business assets will be used as collateral. For loans under $500,000, personal collateral is not required per SBA guidelines, although some lenders may request it.
How much down payment is needed for an SBA loan?
The down payment, known as the equity injection, typically ranges from 5% to 20% of the total cost to start your franchise.
SBA 7A lenders require at least 10%.
SBA CA lenders require at least 5%.
Additionally, lenders usually require you to have cash reserves in your bank account, typically around 10% of the loan amount.
How does my credit score affect my SBA loan application?
Your personal credit score can impact your SBA loan approval in several ways, including:
Interest rates.
Loan amount.
Equity injection.
Required cash reserves.
Most SBA 7A lenders prefer a credit score of 625 or higher, while SBA CA lenders have no specific minimum but look for collections to be on payment plans or paid off.
Can I use an SBA loan for franchise fees and working capital?
Yes, SBA loans for franchise fees are common. However, you must have a signed franchise agreement before funding is provided.
How much can I borrow with an SBA loan?
With LenPick's SBA loan services, you can borrow from $50,000 to $5,000,000 depending on the lender.
SBA 7A loans: Borrow from $100,000 to $5,000,000.
SBA CA loans: Borrow from $50,000 to $350,000.
What documentation do I need to apply for an SBA loan?
To apply for an SBA loan for your franchise, you will need the following:
3 years of personal tax returns
Recent pay stubs
W2 (if employed)
Recent bank statement showing savings
Personal financial statement (assets & liabilities)
What are the interest rates and terms for an SBA loan?
As of November 2024, SBA loan interest rates range from 7.75% to 12.25%. SBA 7A loans charge interest based on prime rate (currently 7.75%) plus 0-2.75%. SBA CA loans (non-profit) are higher at prime rate plus 4.5%.
SBA loans typically have 10-year terms, with no prepayment penalties. SBA CA loan amounts range from $50,000 to $350,000, while SBA 7A loan amounts range from $100,000 to $5,000,000.
How long does it take to get approved for an SBA loan?
On average, it takes 8 weeks to get approved for an SBA loan. The actual SBA loan approval time can vary depending on several factors including:
How quickly you submit your documents.
Lender review time.
Background check results.
Is LenPick my SBA lender?
No, LenPick is not your direct SBA lender. We are a loan broker working with 25 SBA lenders, some of which are preferred SBA lenders. Our services include:
Matching you with 2 SBA lenders.
Securing two pre-approvals for you to choose from.
Introducing you to your lender.
Streamlining your application into underwriting for faster approval.
What are LenPick's service fees?
LenPick offers SBA loan brokerage services including file preparation, lender matching, and loan advocacy. Our fees are structured based on the type of loan:
SBA 7A: Paid by the lender once you're funded.
SBA CA: Charges 3% of your loan amount upon funding, as SBA CA lenders do not pay fees.
Additionally, LenPick helps prepare business plans and financial projections to meet lender requirements. Our fees for these services range from $199 to $1,999, depending on the package you choose. [See Packages] for more details.
HAVE A QUESTION?
Fill out the form, and we will get back to you within 24 hours with the answers you need!
