Question 1

What is an SBA guaranty fee?

Accepted Answer

The guaranty fee is a one-time, up-front fee charged on the government-guaranteed portion of most SBA 7(a) loans with maturities over 12 months, tiered so smaller loans pay a lower percentage than larger ones. It is usually financed into the loan balance rather than paid upfront in cash. Exact tiers and percentages are set by fiscal year — confirm the current schedule with SBA's own official calculator.

Question 2

What DSCR do I need to qualify for an SBA loan?

Accepted Answer

There's no single universal minimum, but many SBA 7(a) lenders look for a debt service coverage ratio of roughly 1.15 to 1.25 or higher. A DSCR of 1.5 or above is generally considered strong. Below 1.0 usually means the business isn't generating enough cash to cover its debt obligations on paper, and often results in denial. Individual lenders set their own actual thresholds.

Question 3

What's the difference between SBA 7(a) and SBA 504 loans?

Accepted Answer

SBA 7(a) loans are flexible general-purpose financing — working capital, equipment, inventory, refinancing, and acquisitions — issued through a single participating lender with an SBA guarantee behind it. SBA 504 loans are narrower: they finance major fixed assets like real estate or heavy equipment through a bank portion plus a CDC debenture portion, typically with a smaller down payment, and cannot be used for working capital.

Question 4

How much down payment does an SBA 504 loan require?

Accepted Answer

Typically around 10% down. This commonly increases to roughly 15% if the business is under 2 years old or the property is special-use, and roughly 20% if both apply. Exact requirements are set deal-by-deal by the CDC and lender.

Question 5

What interest rates apply to SBA 7(a) loans?

Accepted Answer

Most SBA 7(a) loans carry a variable rate tied to the Prime Rate plus a lender-set spread, though fixed-rate options exist for some loan types. The exact spread depends on loan size and maturity and is set by the lender within SBA-permitted caps, which can change. Confirm current caps and your lender's actual quoted spread directly.

Question 6

Is the guaranty fee the same as an origination fee?

Accepted Answer

No. The guaranty fee is paid to the SBA to guarantee the loan and is separate from any origination, packaging, or closing fees a lender may also charge on top of it.

Question 7

Is SBALoanPro affiliated with the U.S. Small Business Administration?

Accepted Answer

No. SBALoanPro is an independent website operated by Berean Defense L.L.C. It is not affiliated with, endorsed by, or operated by the SBA, and none of its calculators are official SBA tools.

Question 8

What is the maximum amount I can borrow through SBA 7(a) or 504?

Accepted Answer

The 7(a) program has a maximum loan amount of $5 million. The 504 program has a maximum loan amount of $5.5 million on the CDC-guaranteed portion. These are the SBA's program-level caps; how much you can actually qualify for depends on your lender's underwriting.

Question 9

Can I use an SBA loan to buy an existing business?

Accepted Answer

Yes — business acquisition is one of the eligible uses of SBA 7(a) financing, alongside working capital, equipment, real estate, and debt refinancing. Acquisition deals typically also involve a buyer equity injection and sometimes a seller note as part of the overall financing structure.

Question 10

What documents do lenders typically ask for on an SBA loan application?

Accepted Answer

Requirements vary by lender, but commonly requested items include business and personal tax returns, financial statements, a business plan or use-of-proceeds explanation, debt schedules, and personal financial statements from owners with a significant ownership stake. Confirm the exact checklist with your chosen lender before applying.

Question 11

Does a good DSCR or a completed calculator estimate guarantee loan approval?

Accepted Answer

No. These calculators provide directional estimates based on the numbers you enter. Actual approval depends on full underwriting by an SBA-approved lender, including credit history, collateral, industry risk, and documentation — factors these tools don't evaluate.

Question 12

Are SBA 504 debenture rates the same for every borrower?

Accepted Answer

The CDC debenture portion's rate is fixed for the life of the loan once it closes, and is generally set through the same government-backed debenture pricing mechanism for a given funding cycle. The bank portion's rate is negotiated separately with your lender and can vary by borrower and deal.

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