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For small commercial businesses, business owners usually have a number of lending options, including ones that are backed by the federal government. The U.S. Small Business Administration (SBA) offers a variety of different loans through private lenders such as banks. The most common types of SBA loans are SBA 7(a) loans and SBA 504 loans. In Florida, borrowers have hundreds of lending options. Which ones should be at the top of that list?
SBA loans are government-backed, so they all have the same lending requirements. To figure out who the best SBA lenders are in a certain area, borrowers will want to look at who the most active lenders are. You can find this information on SBAlenders.com, where they currently have a list of Florida’s most active SBA lenders. Sign up with Lev, and you can use our borrower portal to get your deal out for these lenders to consider.
In Florida, TD Bank is currently the most active SBA lender. For SBA 7(a) loans, they require a down payment of 10%, with loan amounts up to $5 million and a term of 25 years. There are no balloon payments and up to 25 years of amortization. For SBA 504 loans, TD Bank requires a 10% down payment, with up to a 20-year loan term. For a first mortgage, there is no maximum loan amount. For a second mortgage, the maximum loan amount is $5 million, sometimes $5.5 million, depending on the industry. There are no balloon payments. Up to 25 years amortization is offered.
United Midwest Savings Bank is the second most active SBA lender in Florida. They offer commercial SBA loans over $150,000. Specific lending terms vary depending on the type of SBA loan you’re looking for, but the bank connects you with a lender based on the type of business you have. They offer commercial SBA loans to medical practices, dental practices, optometry practices, veterinary practices, insurance agencies, the hospitality industry, funeral homes and other general industries. However, to get specific terms, the bank requires borrowers to speak with a lending agent directly.
Wells Fargo Bank is also a top SBA lender in Florida. Wells Fargo offers SBA 7(a) loans up to $5 million, with terms up to 25 years. Interest rates can be either fixed or variable. According to Wells Fargo, these loans are recommended for longer term financing for businesses with a net worth below $15 million and an average net income below $5 million. Wells Fargo’s SBA 504 loans are offered up to $6.5 million for the Wells Fargo portion and up to $5 million for the portion funded by a Certified Development Company. For commercial real estate, the terms are up to 25 years — and for machinery or equipment, up to 10 years. Interest rates can be either fixed or variable.
As a major SBA lender in Florida, Newtek Small Business Finance offers loans $10,000 to $5 million, with payback terms between 7 and 25 years. For specifics regarding the different SBA loans, Newtek requires borrowers to speak directly to a lending agent.
First Home Bank is a Florida lender under the umbrella of BayFirst Financial that is very active in SBA lending. First Home Bank offers SBA loans up to $5 million. First Home also requires borrowers to speak to a lending agent to get the specific terms for each type of SBA loan.
Compared to other types of business loans, an SBA loan can be the most difficult. Although most small businesses can be eligible for an SBA loan, the government requires a long and often complicated application process. SBA loans can take weeks or months to get approved, and the eligibility requirements set forth by the government are high. Brokers can help navigate these obstacles.
SBA preferred lenders have been approved and authorized by the SBA to issue the final approval for SBA loans, said Christian Moreno, the CEO of GoKapital. Preferred lenders help borrowers get SBA loans more quickly than they would with a non-preferred lender. “Non-preferred lenders have to initially submit a loan application to the SBA for their approval,” Moreno explained. “This means that an approval decision may take longer.” However, preferred lenders don’t need to wait for the SBA to go over and approve the loan.
The easiest SBA loan to get depends on your specific circumstances and what you’re seeking financing for. According to Moreno, an SBA express loan is a faster alternative to the 7(a) loan. With an express loan, the lender will be less strict with their requirements, and pre-approvals can occur in less than one week. Currently, express loan amounts are capped at $500,000. The requirements are similar to that of a 7(a) loan, but with an express loan, the SBA only guarantees 50% of the loan amount, as opposed to 85% with a 7(a) loan. Therefore, rates are slightly higher. “However, if a business is seeking funding quickly at a relatively low rate, the SBA express loan is an economically viable option,” Moreno argued. “With terms of 5 to 25 years and rates of 4.5-6.5% over the prime rate, it is an attractive option for borrowers that may not qualify for other forms of financing.”
SBA 504 and SBA 7(a) loans are other common types of SBA loans. When searching for an SBA lender, you’ll have an easier time finding lenders that offer those two loan types. Other SBA loans include SBA microloans, SBA disaster loans, SBA community advantage loans, SBA export working capital loans, SBA export express loans, and SBA international trade loans. These can be easier to get depending on your specific situation. For instance, if your business suffered damage due to a natural disaster, then you can easily qualify for an SBA disaster loan. However, these SBA loans are case-by-case dependent.
Before applying for an SBA loan, it’s important to do your due diligence and make sure that your small business meets the eligibility requirements. SBA loans typically require businesses to have been in operation for at least two years, with an annual revenue of $100,000 or more for the most recent fiscal year. Although there’s no specific credit score eligibility, you’re more likely to get approved if you have a high personal credit score. And of course, you need to show a need for the requested funds.
