Getting an SBA loan can be an excellent way to finance your next big business milestone. Whether you chose an SBA 7(a) loan, an SBA 504 loan, microloan, or even a PPP loan or Economic Injury Disaster Loan, each program will have a different method for determining rates and repayment schedules for your SBA loan payments.
Here’s how you can figure out what your SBA payment will be—often before you apply. Important Note: Applying for a Business Loan Is Changing Due to COVID-19: Here’s What It Means
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Figuring out your SBA loan payment
The best way to estimate what your monthly loan payment amount will be is to use a business loan calculator:
Using the SBA loan payment calculator
To make the best use of this tool, however, you’ll need a few additional pieces of information. The calculator requires the following:
- Loan amount
- Interest rate (as a percentage)
- Origination and application fees, if applicable
- Loan term (in months)
- Monthly servicing charge, if applicable
If one of the information fields doesn’t apply, just type “0” into the term loan calculator, and you’ll be able to calculate the estimated monthly payment amount for your loan.
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SBA loan payment by loan type
In addition to using the calculator, it’s wise to become familiar with the type of SBA loan you are interested in taking out. Each loan will have slightly different fees and payment terms. Some expenses don’t apply to all, and others may have special considerations that are unique to the loan. See the most common SBA loans for additional guidance.
SBA 7(a) loan fees
The SBA 7(a) loan is the most popular loan program. These loans are made by lenders approved by the SBA to offer these loans. They may be used for any number of specific purposes, including: new construction, expansion or renovation, or to purchase land or buildings; to purchase equipment, fixtures, leasehold improvements; working capital; for a seasonal line of credit, inventory or starting a business; or even to refinance debt for compelling reasons. Each lender must follow SBA guidelines but may impose their own requirements as long as they don’t discriminate against borrowers on a prohibited basis.
This means you may need to check with different financial institutions in order to find the right lender for your qualifications.
The costs of a 7(a) loan include the following:
- Principal – Original amount of the loan
- Interest – Variable rates are based on the prime rate and currently range from 5.5% to 8%. Fixed 7(a) loan rates currently range between 8.25% and 11.25%. (Find current SBA loan rates here.)
- Guaranty (or guarantee) fees:
- For loans with a maturity that exceeds 12 months, the fees are:
- For loans of $150,000 or less: 2% of the guaranteed portion.
- For loans of $150,001 to $700,000: 3% of the guaranteed portion.
- For loans of $700,001 to $5,000,000: 3.5% of the guaranteed portion up to $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.
- For loans with a maturity of 12 months or less, the fee is 0.25% of the guaranteed portion.
- For loans with a maturity that exceeds 12 months, the fees are:
The maximum loan amount for an SBA 7(a) loan is $5 million and the maximum repayment period is 25 years, though most loans carry a repayment term of up to 10 years. Loan funds may be used for a variety of business uses, including upgrading equipment, working capital, for a seasonal line of credit, inventory, or even to pay off high-interest debt in certain cases.
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SBA Express loan fees
The most popular SBA loan program (in terms of dollars funded), SBA Express loans offer smaller loans of up to $350,000 with faster approval. Both term loans and lines of credit are available under this program and these SBA loan funds may be used for the same purposes as 7(a) loans.
The lender may charge up to 4.5% over the Prime rate on loans over $50,000 and up to $350,000 ($500,000 for Export Express) and up to 6.5% over the Prime rate for loans of $50,000 or less, regardless of the maturity of the loan. (The prime rate is currently 3.75% which means the maximum variable rate is between 8.25% and 10.25%.)
The repayment period varies. Term loans follow the same maximum loan maturities as 7(a). Lines of Credit (LOCs) go up to 10 years including a term out period where no more credit may be drawn.
SBA 504 loan fees
SBA 504 CDC loans tend to be larger and can be used for a variety or purposes including to purchase land or primarily owner-occupied commercial real estate, building new facilities, refinancing non-government guaranteed commercial mortgage debt, or to purchase fixed assets for expansion or modernization. These loans draw on three sources of funds: a Community Development Corporation (CDC) lends 40% of total project costs, a financial institution (such as a bank) lends up to 50%, and the borrower contributes 10-20%. There is no maximum loan amount but the maximum SBA debenture is $5 million for most loans.
Costs for 504 loans include:
- Interest – There are two interest rates that will be charged: the fixed interest rate for the CDC portion of the loan which is guaranteed by the SBA, and the interest rate for the bank portion of the loan which may be fixed or variable and can vary from lender to lender. The maximum rate for the bank portion of the loan is 6% over the New York Prime Rate.
- Guaranty fees – The upfront guaranty fee is currently .50%
- Annual service fee — 0.3205% for 504 loans except for the 504 Debt Refinance without Expansion Program which carries an annual service fee of 0.3220%. (These are reduced over the life of the loan.)
- Funding fee: .25%
- Processing fee: 1.5%
- Underwriting fee: The formula is complicated, but expect around .4%
- Other fees: There are other fees that may be charged including attorney’s fees and appraiser’s fees; title, hazard and flood insurance fees; environmental impact fees; and points.
While this is a more complicated loan program and may take some work to qualify, 504 loans offer attractive fixed debt loans for financing large purchases.
SBA Microloan fees
SBA Microloans are generally made by non-profit community-based organizations. Microloan proceeds may be used only for working capital and acquisition of materials, supplies, furniture, fixtures, and equipment.
SBA microloans are considered the most accessible to small businesses, since even startups may qualify. The organizations that make these loans strive to serve disadvantaged small business owners, such as women, minorities, veterans and/or low-income entrepreneurs.
While there are limits on rates that can be charged to borrowers, generally rates are negotiated between the borrower and the intermediary making the loan, and typically range from 6.5% to 9%. In 2019, the average Microloan was $14,735 and carried a 7.5% interest rate.
Fees: Borrowers may be charged reasonable packaging fees of no more than 3% of the loan amount for loans with terms of one year or more, or 2% for loans with terms of less than one year. They may also be charged actual paid and documented closing costs.
These loans are designed to be as short as necessary, and the maximum loan term is six years.
Since they don’t usually require collateral, however, they are an attractive option for businesses with few assets. Microloans are a valid working capital option and a less-expensive option for large purchases than a credit card or some personal loans.
PPP loan payments
Paycheck Protection Program (PPP) loans are a type of SBA 7(a) loan created under The CARES Act to help small business owners survive the coronavirus economic crisis, primarily by helping them keep employees on payroll. Applicants can qualify for a loan of 2.5 times average monthly payroll.
PPP Loan forgiveness
PPP loan forgiveness is available if loan proceeds are spent properly (primarily on payroll costs).
Borrowers submit a loan forgiveness application to the lender; any remaining balance not forgiven carries an interest rate of 1%. The repayment term is either two years for loans originated before June 5, 2020, or five years for loans originated on or after that date. There is no prepayment penalty if you pay it off faster.
EIDL loan payments
The Economic Injury Disaster Loan (EIDL) program is also an SBA loan program that falls under the SBA Disaster Loan program. These loans are designed to help small businesses that have suffered substantial economic injury in a federally declared disaster area. For businesses impacted by coronavirus, that includes qualified small businesses in all 50 states and US territories. Certain agricultural businesses, ESOPs, nonprofits, tribal organizations are also eligible, as are self-employed individuals and independent contractors.
An SBA EIDL loan due to the COVID-19 crisis carries a 30 year repayment term with an interest rate of 3.75% (or 2.75% for non-profits.) The loan amount will be determined by the SBA based on economic injury, up to a maximum $2 million. There is currently no loan forgiveness for these loans— they must be paid back. But borrowers may also request an Economic Injury Disaster Loan grant (or “advance”) of up to $10,000 (administered as $1000 per employee.) There is no personal guarantee for loans under $200,000 and no collateral is required for loans of less than $25,000.
SBA loan interest rates
Of all the factors that determine your exact monthly loan payment, nothing has more influence than SBA loan rates. The interest rate can mean an SBA payment difference of a few dollars – or a few hundred dollars – depending on the size of your loan. Some loans feature set interest rates. For others, the SBA may cap the interest rate, but lenders may charge less. For those programs where interest rates may vary, a variety of factors may influence the rate for which borrowers qualify.
Among them are:
- credit scores
- ability to repay
- time in business
- net annual revenues
Even if these factors don’t affect the interest rate, they may influence whether you qualify. When it comes to small business loans in general— including business credit cards— one of the most effective ways to lower loan payments is to get your business and personal credit scores into the excellent range. Business owners with excellent credit often qualify for lower rates, which in turn means lower payments and less money paid over the life of the loan.
Where can I get an SBA loan?
SBA loans are made by lenders approved by the SBA. The exception is loans made under the disaster assistance program which are made directly by the SBA.
SBA resource partners such as SCORE, Small Business Development Centers, Women Business Centers and Veteran Business Outreach Centers can help you understand these programs. Visit SBA.gov to find offices in your area.
Where can I find an SBA 7a loan payment calculator?
The SBA 7(a) loan is just one loan offered by the SBA, and the calculator above takes the basic factors of your loan cost into consideration to help you understand your sba payment. It can give an estimated monthly payment with details provided by you, such as loan term, loan amount, and interest rate. Keep in mind that if your loan carries a variable interest rate, your payments may change as rates change. However, it is not meant to provide an exact monthly payment for your SBA loan and should not be relied upon as such. For specific costs, consult your lender or the terms of your loan contract.
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