View All Posts

Why SBA Lending Deserves Another Look


If you’re considering acquiring a new business or expanding your existing business venture, a Small Business Administration (SBA) loan may be a more attractive option than ever before. Rules implemented within the last few years make SBA 7(a) loans more appealing to lenders and more accessible to businesses.

For example, previously, some SBA loans required up to 25 percent equity from borrowers in deals where goodwill exceeded $500,000. That’s been reduced to 10 percent, of which half can come in the form of a seller’s note.

Just to clarify, an SBA loan is a loan backed by the federal government to provide funding for start-up firms and other businesses that might not otherwise qualify for a traditional loan. Therefore, not all businesses can qualify, and the application process can be cumbersome, but it is still a great option for many businesses.

More Accessibility & Attractive Terms

 In addition to giving businesses access to more capital than they may be able to obtain with more traditional lending, local businesses can benefit in several ways by securing SBA loans, including:

  • Lower down payments.
  • Longer loan terms, fully amortized (no balloons) up to 25 years.
  • Less stringent collateral requirements.
  • Competitive Interest rates, 1.5% to 2.75% over the Prime Rate.

The terms of SBA loans are usually more attractive compared to the offerings of non-bank, alternative lenders, which are a frequent source of capital for companies that don’t qualify for traditional loans. Alternative lenders typically provide funding at very high interest rates – often at 20 percent or more.

Flexibility a Plus

Another benefit to SBA financing is that you can use the funds for a variety of purposes:

  • For working capital
  • To purchase inventory, equipment, or real estate
  • For ground-up construction
  • To refinance existing business debt on better terms

Loans are available from $150,000 to $5 million, and the time from application to disbursement is usually 60 to 90 days.

Start With an SBA-Preferred Lending Partner

Some businesses may shy away from SBA financing because it can be a complex process. But it doesn’t have to be if you work with a knowledgeable and experienced local banker who specializes in SBA financing.

Working with an SBA specialist in your community will not only make the application process faster and easier for you, you’ll work with a local lender who is in touch with the needs and the growth of your community.

The first step in the process starts with an SBA partner, like Republic Bank of Arizona. Our staff of SBA lending experts are readily available to help you through the entire SBA loan process to help business owners like you obtain the capital you need for continued growth.

For more information about SBA Lending, contact Republic Bank of Arizona at 602.277.2500.