9 Facts About Getting an SBA Loan in Idaho

Small businesses power the economy, and the Small Business Administration (SBA) is dedicated to helping American small businesses obtain the financing they need. With 456 SBA 7(a) loans made to Idaho businesses in 2023 for a total of $204 million, it's clear that the SBA is vital to the success of Idaho's small businesses and entrepreneurs. As your local SBA lender in Boise and Coeur d'Alene, Idaho, we created this fact sheet to help you understand the benefits of SBA loans and what you need to know about getting one. Our business bankers are always here to help if you have any questions.

1. The SBA doesn’t make the loan. It guarantees it.

The SBA doesn't make direct loans to businesses, but it provides a guarantee to lenders. A guarantee is a promise from the federal government to the private lender that, if the borrower defaults, the SBA will reimburse the lender for up to 85% of the remaining loan balance. This is different from a regular business loan, in which there is no guarantee of repayment, and reduces the risk of lending to small businesses, making it easier for them to get the financing they need through local lending partners like Idaho Trust Bank

2. They’re not easy to qualify for (you’ll still need solid business financials).

Getting approved for an SBA loan depends on factors like your business cash flow, credit history, and solid financial statements. Although SBA loans are government-backed, lenders must still perform due diligence to assess the risk of lending to a particular business. With that said, SBA loans are designed to help businesses that may otherwise have trouble obtaining financing. Our business lenders are here to help–contact us with questions about the SBA loan approval process. We can also review your business financials with you.

3. The SBA guarantees a wide range of loans.

Businesses can borrow up to $5 million with an SBA loan. The three primary SBA loan programs include:

• 7(a) Loans: This is the most popular type of SBA loan and can be used for working capital, business expansion, or equipment purchases. Borrow up to $5 million with no minimum loan amount. The SBA guarantees 85% of loan amounts under $150,000 and 75% of loan amounts over $150,000, with a maximum guarantee of $3.75 million.
• 504 Loans: Intended for long-term real estate acquisition, construction, and equipment purchases.

• Express Loans: Offers fast funding of up to $500,000 through a revolving line of credit.

4. The SBA sets loan rates.

The SBA determines the maximum interest rate SBA lenders can set. Your interest rate will vary depending on current economic factors like the prime rate and your business's financial position and creditworthiness. To secure the best possible interest rate, businesses need to show they are low-risk borrowers by maintaining good credit, strong finances, and a longer business history. Adding a cosigner to your SBA loan or providing a comprehensive business plan can also help you obtain a better rate. Again, our business lenders are here to help if you have any questions about SBA loan interest rates.

5. Your local lender may have a better offer.

Community banks are a natural partner for local small businesses, making about 60% of small business loans nationally. So, when researching your SBA loan options in Idaho, make sure you talk to us, too. Even if you're not ready to apply for financing, you can still start building a business banking relationship with your local bank by opening a business checking or savings account.

6. You can refinance debt with an SBA Loan.

You can use a new SBA loan to refinance existing business debt at a lower rate and/or with longer terms. Refinancing with an SBA loan can save your business money on interest and improve cash flow with lower monthly payments.

7.  SBA Loans require collateral.

SBA loans require collateral, such as the asset that is being financed or an unlimited personal guarantee from anyone with at least 20% ownership in the business. Collateral helps mitigate the lender's risk and can improve your chances of loan approval. Common examples of SBA loan collateral include:

• Business assets such as real estate or equipment
• Accounts receivable or inventory
• Personal assets of the business owner

8. SBA Loans may have better fees.

Two types of fees are associated with SBA loans: guarantee fees and annual service fees. Guarantee fees cover the cost of a loan default, while annual service fees compensate lenders for making and administering the loans. For SBA Express loans, veteran-owned businesses have no upfront guarantee fee. Similarly, for SBA 7(a) loans of $1 million or less, there are no upfront guarantee fees or annual service fees through September 2024. An SBA loan may be a lower-fee option than other types of business loans.

9. Find a local SBA lender who will build a relationship with your business.

Applying for a loan with the SBA is about more than getting business financing at a favorable rate. It's also about finding a lender who understands the nuances of the local Idaho economy and the unique needs of small businesses. You want to find a local SBA lender who is committed to supporting your business's long-term success. Founded in 1994, Idaho Trust Bank is your local SBA lender in Boise and Coeur d'Alene, Idaho. Check out all our business loans and contact us to learn more about SBA loans or to start the application process.