Thinking About An SBA Loan?

SBA loans are small business loans partially guaranteed by the U.S. Small Business Administration and issued by approved lenders like First Bank of the Lake. They are designed to make capital more accessible to entrepreneurs by reducing risk for lenders, which in turn makes it easier for small business owners to qualify for financing. Key benefits include longer repayment terms (10-25 years), lower down payments (as little as 10%), and competitive interest rates compared to conventional financing. These loans offer flexibility and support for a wide range of business goals, such as purchasing real estate, acquiring businesses, upgrading equipment, or obtaining working capital.

An SBA Preferred Lender, like First Bank of the Lake, is a financial institution that has earned special approval from the SBA to process and approve SBA loans more efficiently. Under the SBA Preferred Lenders Program (PLP), these lenders are delegated greater authority to make final credit decisions without waiting for direct SBA approval. This significantly speeds up the SBA loan process, often resulting in faster approval times (days or weeks instead of months). Preferred lenders are chosen based on their proven track record, high volume of SBA loans, and expertise in SBA loan requirements. They offer streamlined documentation and expert guidance from dedicated SBA loan officers, which can improve a borrower's chances of approval and help navigate complex scenarios.

The two most widely used SBA loan programs are the SBA 7(a) and SBA 504 loans.

• SBA 7(a) Loan: This is the most flexible option, suitable for diverse business needs including working capital, equipment purchases, commercial real estate acquisition, business acquisitions, and refinancing existing debt. Loan amounts can go up to $5 million with repayment terms of 10 to 25 years depending on the use of funds.
• SBA 504 Loan: This program is specifically designed for the purchase, renovation, or construction of major fixed assets, such as owner-occupied commercial real estate and heavy equipment. It features a unique structure involving a loan from a conventional lender (50%), a loan from a Certified Development Company (CDC) backed by the SBA (up to 40%), and a minimum 10% borrower down payment. Total project costs can exceed $15 million, with repayment terms of 10, 20, or 25 years and fixed interest rates.

To qualify for an SBA loan, your business must operate for profit and be located in the U.S. or its territories. It must meet the SBA’s definition of a "small business," which varies by industry and is generally based on annual revenue (e.g., typically below $8 million for retail/service) or number of employees (e.g., fewer than 500 for manufacturing/wholesale). Borrowers need to demonstrate personal or financial investment in the business, have a strong credit history (often a personal FICO® score of 680 or higher), a sound business plan, and the ability to repay the loan. Additionally, the business must not be involved in restricted activities such as gambling, pyramid schemes, or passive investments. Applicants must also show they are unable to obtain similar financing with reasonable terms elsewhere.

Certain types of businesses are ineligible for SBA loans. These include businesses engaged in illegal, speculative, or passive activities (e.g., gambling, pyramid schemes, or rental properties with no active management). Non-profit organizations are also ineligible, as SBA programs are designed for for-profit enterprises. Other restricted businesses include those that promote religion, government-owned entities, or businesses located outside the U.S. and its territories. Additionally, businesses that do not meet the SBA's size standards, or those with owners who have recent bankruptcies, unresolved tax liens, or are delinquent on federal debt, may be disqualified.

SBA loan rates are generally structured to be more affordable than conventional financing.

• SBA 7(a) Loan Rates: These can be fixed or variable, typically tied to the prime rate plus an allowable spread set by the SBA. The spread varies based on loan amount and term but is capped by SBA guidelines. These rates are often more favorable than traditional business loans.
• SBA 504 Loan Rates: These are generally fixed for the life of the loan. The CDC portion's rate is updated monthly based on bond market debenture sales and remains fixed for the loan's duration, offering stability. The conventional lender portion (50%) can be fixed or variable. These fixed rates, combined with long terms, help manage cash flow effectively. Overall, competitive SBA loan interest rates make long-term borrowing more affordable, especially for businesses that might not qualify for the best terms on conventional loans.

First Bank of the Lake is a leading SBA Preferred Lender with extensive experience in SBA loans nationwide. They specialize exclusively in SBA loans for businesses, including the SBA 7(a) and SBA 504 programs. In the past 12 months, they financed over $600 million in SBA loans and are ranked as the 15th largest SBA lender in the U.S. in 2024. As of July 2025, they are also ranked 19th most active SBA 7(a) lender and 15th most active SBA 504 lender, and among the top 5 SBA Franchise Lenders for 2023 and 2024. Their Preferred Lender status allows for faster approvals and efficient processing due to in-house credit decisions. They are recognized for their customer service, customized loan structuring, and commitment to supporting small business growth across all 50 states.