SBA 101: Small Business Loans for Startups

A shortage of business capital is kryptonite to any startup company. But for entrepreneurs with a dream — and a down payment — a U.S. Small Business Administration loan can swoop in and save the day.

Think of the SBA loan program as the superhero of small business financing: able to leap tall financing hurdles in a single bound. While SBA loans are frequently used by established businesses (when longer or blended terms, or different collateral requirements are desired), there can be specific advantages for startups that merit consideration.

While the SBA does not lend directly to small businesses, banks receive a guarantee that the government will repay a portion of the loan if the borrower defaults on payments. This backing incentivizes banks to consider funding viable business concepts that may be considered inherently more risky for a variety of reasons, such as less than two years in business, change of ownership, or operating in a particular industry segment.

The SBA offers a variety of loans for small businesses, each with its own super strengths to meet your startup’s specific needs. Here are six SBA loans to consider.

1) SBA 7(a) Loan

It’s a bird! It’s a plane! It’s the SBA 7(a) loan! Just as Superman is the most recognized superhero, the SBA 7(a) general small business loan is the most popular SBA loan. That’s because, like the Man of Tomorrow, the 7(a) loan is powerful and versatile. This Loan of Steel can do it all, from funding start-up costs to paying for equipment, machinery, furniture, fixtures, supplies or materials.

With loan amounts up to $5 million, the 7(a)’s superpowers can imbue your startup with improved cash flow and long-term financing during those first make-it-or-break-it years.

2) SBA Express Loan

In superhero terms, the SBA Express loan is The Flash of SBA-backed loans. The speedier cousin of the 7(a) loan, the SBA Express loan can put as much as $500,000 in your hands. While the Scarlet Speedster is adept at quantum tunneling to pass through walls, the SBA Express passes over excess paperwork with a streamlined approval process for an easy-to-use line of credit or a term loan. SBA offers a lightning-fast turnaround time of 36 hours to help accelerate the decisionmaking process. 

Zions Bank provides a fast, streamlined process for SBA Express loans. Entrepreneurs may gain access to SBA Express loans up to $250,000 with quick approvals and minimal paperwork.

3) SBA 504 Loan

No superhero draws power from specialized equipment and real estate holdings quite like Batman and his alter-ego, Bruce Wayne. An SBA 504 loan finances fixed assets like land, buildings and machinery so you can begin building your future Wayne Enterprises. With an SBA 504 loan, the bank funds a portion and a Community Development Corporation (CDC) funds a portion, along with the down payment from the borrower.  Maximum loan amounts range from $5 million to $5.5 million, depending on the type of business or project.

4) SBA MARC Loans

Just like Iron Man uses high-tech upgrades to build advanced suits of armor in his lab, U.S. manufacturers can supercharge their production with the 7(a) Manufacturers’ Access to Revolving Credit (MARC) Loans. This loan is designed to help improve flexibility and minimize red tape for eligible businesses, defined as North American Industry Classification System (NAICS) codes 31–33.

In addition to traditional manufacturers, other qualifying companies could include commercial bakeries, fabric mills and publishing/printing services.

5) SBA CAPLine Loan

As seamlessly as the Black Panther switches back and forth between Panther suit and plainclothes, an SBA CAPline loan lets you transition between busy and slow seasons without an interruption in cash flow so you have working capital when you need it. If you are a contractor, builder, or own a seasonal business, a CAPLine loan of up to $5 million can meet your short-term cash flow needs.

6) SBA Export Loans

Wonder Woman is on a mission to unlock the potential of humanity. Similarly, SBA export loans are aimed at unlocking the potential of small businesses. SBA Export Express loans allow your startup to expand or enter new export markets. The Export Working Capital Program gives working capital to small, export businesses so they can maintain their export orders.

Could an SBA loan help supercharge your business? Our Zions Bankers are standing by to help you find the right SBA loan for your business.