What Is an SBA Loan?
An SBA loan is a loan for small businesses in which a portion of the principal is guaranteed by the federal government through the Small Business Administration (SBA). The SBA doesn't lend money directly to business owners. Instead, a lender who works with the SBA provides the funds.
As a borrower, you pay the lender — not the SBA — and the bank closes your loan, disburses the proceeds and services your loan. The SBA's role in the process is to guarantee a portion of the loan to incentivize lenders to make loans they would not make under conventional methods.
Small businesses use SBA loans for all types of needs, including:
- Real estate purchase or refinance
- Business acquisition
- Equipment purchase
- Debt refinancing
Types of SBA Loans
The SBA offers several loan programs, including:
- SBA 7(a) loans: The 7(a) loan is the SBA's primary program for small businesses. Small business owners often use this loan to free up working capital or purchase inventory, business essentials and equipment.
- CDC/SBA 504 loans: The 504 program provides small businesses with fixed-rate, long-term financing to acquire assets for expansion or modernization. These loans are available through Certified Development Companies (CDCs) — the SBA's community-based partners.
- SBA CAPLines lines of credit: CAPLines is an umbrella program that uses various lines of credit features to help small businesses meet their short-term and working-capital needs.
- SBA Export loans: The Export program gives lenders and exporters a simplified way to get SBA-backed financing for lines of credit and loans up to $500,000.
SBA funding for women-owned businesses: The SBA offers loan programs to support women-owned businesses, coordinated by the Office of Women’s Business Ownership (OWBO).
SBA Lending Benefits:
Lower down payments
A smaller down payment allows your business to keep cash on hand to support day to day business operations.
SBA lending usually includes flexible pre-payment terms, allowing you the option to accelerate payments with no penalty.
SBA loans are long-term loans, usually 10-25 years with no balloon payments. This means lower monthly payments so your business has more cash on hand to allocate toward sales and growth.
Why Choose First Commonwealth Bank as Your SBA Lender?
The SBA partners with certain lenders for their loan programs. First Commonwealth Bank meets several of the SBA's key lender requirements for reputation, experience and regulatory compliance, making us an SBA Preferred Lender.
As a Preferred Lender, we can simplify and expedite the process of getting your SBA loan approved. We are also authorized to make the final credit decision on any type of SBA loan.
If you're a qualified borrower, choosing us as your SBA lender means you can count on a quick approval process from a trusted bank dedicated to helping your business succeed.
Get in Touch With Us Today
First Commonwealth Bank has helped individuals and businesses in Pennsylvania and Ohio get the financing they need since 1982. We deliver the services of a large financial institution with the personalized, attentive care you'd expect from your local bank. When you partner with us, you'll get exceptional customer service, low rates and flexible loan terms.
Connect with our team of SBA lenders to find the best option for your business's financial situation. You can also schedule an appointment to meet with us in person.