SBA Loan
General Guidelines- Owner Occupied SBA***Minimum Loan Amount is $500,000; Max Loan Amount $2,000,000
SBA 7A Program:
For commercial loans that include real estate as collateral, for business only loans that do not own the real estate. Proforma projections are allowed for new business start ups
MUST BE OWNER OCCUPIED 51%
Must have a 660 score minimum – higher the better
LTV Max is 80%-85%
Property and business must cash flow – a 1.25 DSCR would be a minimum. The borrowers personal debt to income ratios must generally be below 45%.
For business only, most lenders want 50% or more collateralization – case by case basis
Time Frame – 30-60 days from LOI (letter of intent) issued by preferred lender
Knock Out’s – lack of down payment, lack of income – no stated income, we can use a proforma for new business start ups but the numbers will be scrutinized and verified, credit below 640,
SBA 504 Program:
***Minimum Loan Amount is $500,000; Maximum Loan Amount $5,000,000
The SBA 504 program is for real estate only and generally for purchases only, meaning that a business would use this program to buy a building, build it out to their specifications and move their existing or new business into it.
No cash out. This is a 50% LTV first with an FDIC insured bank, a 40% CLTV second mortgage from the SBA. These loans are much tougher to get done in comparison to the SBA 7A program
LTV – 90% for Real Estate Backed
MUST HAVE OWN EQUITY – NO 100% FINANCING WITH A SELLER SECOND
Can possibly get cash out to improve the business or for working capital
Gifts (down payment help) are allowed from family
Experience may be overlooked with a strong franchise that is approved by SBA. Check out www.franchiseregistry.com to view a list of approved franchise operations
51% owner occupied
660 minimum score
1.25 DSCR, personal debt must cash flow also
Loan can go to 90% LTV, 10% must be from the borrower’s own seasoned funds
***Loan amounts can now go up to almost $9 Million***
Time Frame – 30 days from LOI (letter of intent) issued by preferred lender
Knock Out’s – lack of down payment, weak financials or lack of profit, lack of experience, must show income – no stated income, no seller seconds