Funding
Why 2021 is
the Year For You to Get an SBA Loan
It’s a great time to get an SBA loan, thanks to a new stimulus bill signed into law in December 2020. The Small Business Administration partners with banks to give out small business loans. In a normal year, the SBA guarantees the banks 75% of the value of these loans in the event of a default. However, because of the December stimulus, known as the Consolidated Appropriations Act of 2021, the SBA now guarantees 90% of the value of small business loans in 2021, in the event of a default. This increase in loan guarantee
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from the SBA has banks highly motivated to lend to small businesses. Additionally, banks have limited exposure as borrowers are required to put down 10% of the loan amount. In general, in order for the Small Business Administration to afford defaults, SBA loans are closely underwritten and expensive, with fees paid by the borrower at closing. In a normal year, an SBA loan borrower is required to pay a guarantee fee of 2%-3.5% of the loan amount so the SBA can afford to pay for the loans in default.
by Bethany McClellan In 2021, this guarantee fee is waived. Also in 2021, if a loan is approved by September 30, the borrower receives the first 3 months principal and interest paid for them by the SBA, up to $9,000 per month. Now is definitely the time to apply for an SBA loan. If you’re looking to start a business or franchise, grow your business by acquisition, buy real estate, or buy your partner out, the SBA is ready to lend to you. There are nationwide lenders not involved with PPP that are prepared to work with you. With a lower required amount
