SBA Loan Product Comparison

SBA Guidelines for 7(a), 504, Express Loans
SBA GuidelinesSBA 7(a) ProgramSBA Express LoansSBA 504 Loans
Eligibility

For-profit business

Must qualify as a small business according to SBA guidelines. Size varies by industry type.

For-profit business

Must qualify as a small business according to SBA guidelines. Size varies by industry type.

For-profit business Tangible net worth less than $15 million.

Net profit after tax less than $5 million.

Loan Size

Maximum SBA guaranteed portion is $3.5 Million

Maximum SBA loan is $5 Million

Maximum SBA loan amount is $350,000

Maximum SBA loan amount is $5 million for projects meeting a public policy goal and $5.5 million for manufacturing companies

Financing

Provided by Highland Bank SBA provides an 85% guaranty to Highland Bank on loan amounts up to $150,000.

SBA provides a 75% guaranty to Highland Bank on loans exceeding $150,000.

Provided by Highland Bank

SBA provides a 50% guaranty to Highland Bank.

50% financed by Highland Bank 40% financed by SBA through a Certified Development Company.

10% financed by borrower (more required for new businesses or special purpose real estate)

Use of proceeds
  • Land
  • Buildings
  • Equipment
  • Furniture & Fixtures
  • Inventory
  • Business Acquisition
  • Working Capital

Working capital lines of credit.

  • LandBuildings (purchase, new construction, or renovation)
  • Machinery & Equipment (minimum useful life of 10 years)
Collateral

SBA requires that Highland Bank take a first secured interest in business assets and/or a mortgage on real estate.

SBA requires that Highland Bank take a first secured interest in business assets and/or a mortgage on real estate.

Highland Bank holds the 1st mortgage on real estate or the 1st secured interest in machinery & equipment.

SBA holds the 2nd mortgage on the real estate or the 2nd secured interest in machinery & equipment.

Loan Terms

Working Capital - up to 7 years

Equipment - up to 10 years (or useful life)

Real Estate - up to 25 years

Revolving lines of credit available up to 7 years. Initial term is 1 year with renewal options.

Highland Bank loan - minimum 10 years on real estate, 7 years on machinery & equipment

SBA loan - 20 years on real estate, 10 years on machinery & equipment

SBA Guaranty Fee

SBA charges a 2% fee on the guaranteed portion of loans $150,000 or less.

SBA charges a 3% fee on the guaranteed portion of loans over $150,000 up to $700,000

SBA charges a 3.5% fee on loans over $700,000

SBA charges .25% of the guaranteed portion the first year on the line of credit.

During the second year 1.75% will be charged on loans of $150,000 or less and 2.75% on loans over $150,000.

Highland Bank charges a normal fee on the bank loan.

CDC and SBA fees are approximately 3% and are financed over the life of the loan.

Interest Rate Spreads

Rates can be fixed or variable. Maximum spread:For terms up to 7 years - WSJ Prime + 2.25%For terms 7 years and greater - WSJ Prime + 2.75% Additional 1% may be charged on loans between $25,000 and $50,000.

Additional 2% may be charged on loans under $25,000.

Rates can be fixed or variable. Maximum spread: For loans equal to or less than $50,000 the maximum spread is WSJ Prime +6.50%.

For loans over $50,000 and up to $250,000 the maximum spread is WSJ Prime + 4.50%.

Highland Bank loan - negotiated rate between borrower and Bank (fixed or variable)

SBA loan - below market fixed rate and fixed payment, loan rate set when debenture is sold

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