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How is an sba loan different from other business loans?

Small Business Administration uses federal money to provide an SBA Guarantee to each participating lender, so they can provide long-term financing with better repayment terms to borrowers that other small business loans don’t.

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How does my business qualify for an sba loan?

In order to qualify for financing through the loan program with the SBA, business owners need to operate a for-profit business and have a credit score of 640 and above.

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How do I start the process of obtaining an sba loan?

Small business owners now can rely on Orumfy to guide them through the loan application and highly increase their chances of approval for long-term financing through the SBA loan program.

OVERVIEW

The Small Business Administration is a federal agency dedicated to helping small business owners grow their businesses, take advantage of contracting opportunities and get better access to working capital through their loan program.

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WHAT YOU NEED TO KNOW

What could my business finance with an sba loan?

You can borrow capital for nearly any business purpose - including working capital to improve cash flow, purchasing inventory or equipment, buying real estate, opening a new location, long term growth opportunities.

How long does it take to get approved for an sba loan?

With Orumfy we made the process of obtaining working capital faster and easier.

We get business owners approved and funded between 2 weeks to 3 months.

A large portion of that time is usually taken up by the borrowers getting all the necessary documentation prepared.

Orumfy will analyze your business as well as any real estate you might need to use as collateral, make recommendations and guide you through every step of the process.

What interest rates can I expect from an sba loan?

SBA programs offer businesses fixed-rate financing with interest rates starting as low as 7%.

Having good collateral such as real estate or high value equipment will help you get the lowest rate possible for your credit score range.

What is the most popular sba loan for small businesses?

The most popular types of sba loans available to small business owners for financing are 7(a), Microloan Program, CDC/504 and Disaster Relief.

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Here is a brief overview of each loan program: sba-img
Why should I choose an sba loan instead of a conventional business loan?

One of the main advantages an SBA Loan offers small business owners over conventional loans is low cost fixed-rate financing.

In addition, there are seldom prepayment penalties attached to them.

SBA Financing can provide borrowers with loan amounts as high as $5 million.

This option was specifically created for businesses that are unable to acquire financing with conventional loans through regular lending channels.

Why work with guidant for your sba business loan?

Obtaining capital for businesses with sba lending is much easier when working with someone that understands the process.

Orumfy takes the guesswork out of the equation.

What kind of businesses qualify for sba financing?

The Small Business Administration set the requirements that businesses must meet in order to participate in sba programs.
These requirements include:

  • Borrowers must demonstrate an equity investment in the business
  • The for-profit business must be based in the United States
  • Small business owners cannot be involved in certain financial, political or members-only activities
  • Business owners cannot be delinquent on any of your taxes or other debts to the federal government
How it Works
Step 1
Borrowers complete the loan application with Orumfy and provide all the necessary documents
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Step 2
We analyze your documents, provide feedback and work with you until your business meets the requirements set by the SBA.
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Step 3
Package submitted to the SBA for approval
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Step 4
Once approved and repayment terms are accepted closing documents are signed by all parties
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Step 5
Loan Proceeds are disbursed directly to your business
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How it works
  1. Borrowers complete the loan application with Orumfy and provide all the necessary documents
  2. We analyze your documents, provide feedback and work with you until your business meets the requirements set by the SBA.
  3. Package submitted to the SBA for approval
  4. Once approved and repayment terms are accepted closing documents are signed by all parties
  5. Loan Proceeds are disbursed directly to your business
We know the SBA process. We can help you get approved. lets get started

FAQ

What happens if you default on an sba loan?

SBA lending is available to profitable businesses, with business owners having a good credit score.

Although defaults happen less often then with other financing options, they still do.

In the event your business takes a financial downward turn and you are unable to maintain your payments to repay the loan you will be in default.

However, contrary to the information available online, if you default the lender in most cases will choose NOT to go after the borrowers and their owner-occupied real estate, but rather seek reimbursement directly from the Small Business Administration.

A lender may choose to work with the Small Business Administration because of the minimized risk they are exposed to due to the SBA Guarantee that insures them to get reimbursed anywhere from 70% to 90% of the unpaid balance in the event the borrowers default.

The only requirement the lender has to meet in order to get reimbursed by the Small Business Administration is that all fixed assets securing the loan by the borrowers be sold to pay for outstanding loan amounts.

After the lender is reimbursed you will need to present the SBA an “Offer-in-Compromise”, which is basically an explanation of your current business financial situation as well as your personal financial statements.

A personal financial review is required because of the personal guarantee that is signed in order to obtain any types of sba loans.

Keep in mind, hiring an attorney with experience in settling such cases can help remove the personal guarantee as well as get the liens released on any real estate involved.

The key in these situations is for you to present a settlement amount that is substantial, but also sustainable given your finances.

The Small Business Administration will work with you in determining the repayment terms you are able to meet.

How big of a loan can I afford to take out?

Business owners need to ask themselves this question: what is the underlying reason you are looking to borrow capital.

Making an educated decision will help avoid placing an unnecessary burden on your businesses cash flow.

Borrowing more money than you need can overburden your business while not borrowing enough can make the outcome of the project fail.

Whether deciding from short-term loans or long-term loans your ability to repay the loan is crucial.

Take the time to calculate how much you are able to pay.

Use the Loan Affordability Calculator below.

Do sba loans require a personal guarantee?

Whether you are applying for an SBA Microloan through the SBA Microloan Program or an SBA 7(a) any loan program with the SBA will require you to personally guarantee the loan.

Not to be confused with the SBA Guaranty Fee. The guaranty fee is a cost incurred by the borrowers that is paid directly to the federal government at closing before loan proceeds are disbursed.

If I have poor personal credit history, will that prevent me from getting an sba loan?

Despite what a third-party website might tell you, qualifying for a loan program through the Small Business Administration requires good credit.

Even a small microloan with the SBA will require good credit.

The good news for those small business owners with their personal score lower than 600 is that it is not that difficult and will usually take months, not years, to increase your score over the required limit.

You can learn about how to quickly increase your score in this article

While you are working on your credit, there are other types of financing available, such as small business loans for short-term working capital.

Making timely payments on such short-term loans will also help quickly raise your credit.