SBA loans
The cheapest capital in the building, if you can wait for it.
- Amount
- $50,000 – $5,000,000
- Term
- 10 – 25 years
- Time to funding
- 30 – 90 days
- Typical rate
- Prime + 2.25% to 4.75%
- Collateral
- Business assets, plus a personal guarantee and often a lien on real estate
Sec. 01 — What it is
In plain language.
The Small Business Administration does not lend you money. It guarantees a portion of a loan made by a bank or a licensed non-bank lender, which lowers that lender’s downside and lets them stretch on term, on collateral, and on the kind of business they will look at.
Two programs matter in this industry. SBA 7(a) is the general-purpose loan — working capital, equipment, acquisition, refinancing expensive debt, or a combination. SBA 504 is for owner-occupied real estate and heavy fixed equipment, structured as a bank loan plus a debenture through a Certified Development Company, and it is the program that funds plant purchases.
Both are amortising term debt with a fixed monthly payment. There is no revolving feature, no balloon on a standard 7(a), and no prepayment penalty on terms under fifteen years.
Sec. 02 — What it costs
The price, and how repayment actually works.
Typical rate
Prime + 2.25% to 4.75%
- Fixed monthly payment, fully amortising.
- Ten years for working capital and equipment; up to twenty-five years when real estate is the primary collateral.
- SBA guarantee fee runs roughly 0% to 3.75% of the guaranteed portion depending on loan size, and is financed into the loan rather than paid up front.
Sec. 03 — Who it fits
Where this product does its best work.
- Buying the building your plant already operates in, when your landlord finally offers to sell.
- Acquiring a second butcher shop or a retiring competitor’s customer book and equipment.
- Refinancing two or three merchant cash advances into one payment you can actually carry. This is the most common reason a processor calls us.
- A full USDA buildout where construction, equipment and six months of working capital need to come from one place.
- Partner buyouts, which are common in third-generation family shops where one sibling wants out.
Sec. 04 — When this is the wrong product
Three situations where you should not take this.
Your compressor failed this morning
SBA cannot move at the speed of a refrigeration emergency. Thirty days is a fast SBA close and ninety is common. If product is sitting in a warehouse that is climbing through 41°F, you need equipment financing or a short-term working capital advance now, and you can refinance into SBA later once the crisis is over. We will tell you to do exactly that.
You have an unresolved tax lien, a recent bankruptcy, or you are delinquent on federal debt
These are hard stops, not soft ones. An open federal tax lien without an accepted payment plan will fail SBA eligibility screening, and a discharged bankruptcy inside two to three years will fail most lenders’ credit policy. Applying anyway costs you six weeks and tells you nothing you did not already know.
You cannot produce three years of filed returns
Newer shops, businesses that have been on extension for two years, and operations whose books are a shoebox of receipts will not clear SBA underwriting. That is not a judgement about whether the business works — plenty of profitable shops run this way. It just means a different product, and a bookkeeping conversation, come first.
Sec. 05 — Worked example
Refinancing three advances on a state-inspected processor
A state-inspected processor in southern Wisconsin took a merchant cash advance to cover a smokehouse repair in the spring, then a second to cover the first, then a third. Combined daily debits were taking roughly $2,900 out of the operating account every business day. The business was profitable on paper and drowning in practice.
Outcome
Monthly debt service fell from roughly $60,000 to $4,760. The extra $82,000 above the payoff funded a replacement smokehouse control system and left working capital in the account. The fifty-two day wait was survivable only because we bridged the worst advance with a short equipment note in week two — which is the real lesson: the SBA loan was right, but it was not right on its own.
Illustrative example. Figures are not an offer of credit.
- Combined advance balances
- $318,000
- Effective cost of the advances
- ~58% APR blended
- Daily debits before
- $2,900 per business day
- SBA 7(a) amount
- $400,000
- Rate
- Prime + 2.75%
- Term
- 10 years
- New monthly payment
- $4,760
- Time from application to funding
- 52 days
Sec. 06 — What you will need
Documents for this product.
- Three years of business tax returns, and personal returns for every owner at 20% or more
- Year-to-date profit and loss and balance sheet, aged within 60 days
- Twelve months of business bank statements
- A debt schedule listing every existing loan, lease and advance
- Business licenses, and your USDA or state grant of inspection where applicable
- For 504 and real estate: purchase agreement, appraisal, and a Phase I environmental report
Sec. 07 — Questions
About sba loans.
Does a USDA or state grant of inspection help or hurt an SBA application?
Can an SBA loan pay off a merchant cash advance?
How much do I need to put down on a plant purchase under 504?
Will they take my house?
Is the rate fixed or variable?
Sec. 08 — Related
Other products worth comparing.
Sec. 09 — Get started
See whether sba loans fits.
Massive Meat Capital is a commercial finance brokerage, not a lender or a bank. Funding is provided by third-party lending partners. Rates, terms, and approval are determined by the funding partner and are subject to underwriting. Figures shown are illustrative and are not an offer of credit. Products are available to business entities only.