Millions of entrepreneurs turn to the Small Business Administration (SBA) for help in securing funds. However, like everything, this financing method comes with certain conditions. For example, is there a limit to the number of SBA loans you can have? In today’s blog post, we provide an answer.
How Many SBA Loans Can You Have?
The SBA offers various loan programs based on the needs of small businesses. If you’re looking to get a second, third, or fourth SBA loan for your company, you should know that there are no technical limits on how many loans you can get.
However, you should keep in mind that the SBA does not lend money directly, it only provides a guarantee that reduces the risk faced by the actual lenders.
These lenders, in turn, may have some requirements in place if you want to take out more than one SBA loan. Some of these requirements may include:
- Not being allowed to use and SBA loan to pay another SBA loan
- You must be current with your loan payments
- Having a good credit score
- Providing collateral (depending on the type of loan)
7(a) loans are the most common SBA lending program. Known for their versatility, 7(a) loans are designed to provide funding for various business purposes, including short- and long-term working capital, expansion, equipment purchase, and debt refinancing.
These loans can range from a few thousand dollars up to a maximum loan amount of $5 million, depending on the needs and eligibility of your business. The maximum loan terms vary based on the specific use of funds:
- 25 years for real estate
- 10 years for equipment
- 10 years of working capital or inventory loan
504 loans, for their part, are designed to support small businesses in acquiring fixed assets, such as real estate and equipment.
One of the most relevant features of 504 loans is their structure. The 504 loan program involves a partnership between the borrower, a Certified Development Company (CDC), and a commercial lender.
The borrower typically contributes a minimum down payment of 10% of the project cost, the CDC provides 40% of the financing through a debenture backed by the SBA, and the commercial lender covers the remaining 50% of the project cost.
Can I Have Different Types of SBA Loans?
If you’ve already received an SBA loan under any of these programs, you can apply for a different type of SBA loan. For example, if you’ve received a 7(a) loan, there’s no rule saying that you can’t apply for a 504 or loan.
However, the conditions and qualifications for second loans may vary. As we explained earlier, SBA lenders usually have specific requirements when you take out more than one loan, so be sure to talk with your lender to understand where you stand.
Gellyfish: Certainty of Execution in Commercial Loans
At Gellyfish Commercial, we offer commercial financing solutions with the certainty of execution you need to take your business to the next level.
We are located in Riverside, and work with clients all over California and beyond. Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), social media (Facebook, Twitter, LinkedIn), or through the live chat on our home page to schedule a free consultation.