Interest rates for Small Business loans

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7(a) Loan Amounts, Fees & Interest Rates

The specific terms of SBA loans are negotiated between a borrower and an SBA-approved lender. In general, the following provisions apply to all SBA 7(a) loans.

Loan Amounts

7(a) loans have a maximum loan amount of $5 million. SBA does not set a minimum loan amount. The average 7(a) loan amount in fiscal year 2012 was $337, 730.


Loans guaranteed by the SBA are assessed a guarantee fee. This fee is based on the loan’s maturity and the dollar amount guaranteed, not the total loan amount. The lender initially pays the guaranty fee and they have the option to pass that expense on to the borrower at closing. The funds to reimburse the lender can be included in the overall loan proceeds.

On any loan with a maturity of one year or shorter, the fee is 0.25 percent of the guaranteed portion of the loan. On loans with maturities of more than one year, the normal fee is 2 percent of the SBA-guaranteed portion on loans up to $150, 000, 3 percent on loans of $150, 000 to $700, 000, and 3.5 percent on loans of more than $700, 000. There is also an additional fee of 0.25 percent on any guaranteed portion of more than $1 million.

Interest Rates

The actual interest rate for a 7(a) loan guaranteed by the SBA is negotiated between the applicant and lender and subject to the SBA maximums. Both fixed and variable interest rate structures are available. The maximum rate is composed of two parts, a base rate and an allowable spread. There are three acceptable base rates (A prime rate published in a daily national newspaper*, London Interbank One Month Prime plus 3 percent and an SBA Peg Rate).

Lenders are allowed to add an additional spread to the base rate to arrive at the final rate. For loans with maturities of shorter than seven years, the maximum spread will be no more than 2.25 percent. For loans with maturities of seven years or more, the maximum spread will be 2.75 percent. The spread on loans of less than $50, 000 and loans processed through Express procedures have higher maximums.

*All references to the prime rate refer to the base rate in effect on the first business day of the month the loan application is received by the SBA.

Percentage of Guarantee

SBA can guarantee as much as 85 percent on loans of up to $150, 000 and 75 percent on loans of more than $150, 000. SBA’s maximum exposure amount is $3, 750, 000. Thus, if a business receives an SBA-guaranteed loan for $5 million, the maximum guarantee to the lender will be $3, 750, 000 or 75%. SBA Express loans have a maximum guarantee set at 50 percent.

2006-12-14 13:11:40 by -

Business start up loans

> #1 - If you're getting a small business loan, and your company start-up costs $100k, how much should you have up front? 10%? 20% (in order for the bank or loan company to take you seriously and keep your interest rates affordable?
Most new businesses fail within three years. For that reason it is important not to borrow more money than you can repay through short-term liquidation.
As a simple example, suppose you bought a new delivery vehicle worth $20,000, and you borrowed the full $20,000. Three years later you would not have paid off much of that loan but the value of the vehicle would have gone down quite a bit after three years of business use

2012-12-14 03:02:27 by CottusRedux

Obama is killing small business because....

He and his henchmen Geithner, Bernanke, etc. plan to have the first government in the history of mankind to control inflation through Government regulation
right now there are Federal Regulators in ALL banks large and small across the nation preventing "inflationary" loans,, and as a consequence...massively killing new jobs
Bernanke just announced that low interest rates will continue for the next few years
Proof that the plan is for high unemployment through the control of the banking sector in order to make possible (they think) wild, usually inflationary mon

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