| Small Business Finance: Credit Characteristics |
| |
SBA 7(a) |
Companion Loan |
B&I |
| Loan Size |
$250,000 to $1.5 million |
$250,000 to $2 million |
$1 million to $10 million |
| Pricing |
2.75% over Prime |
2.75% over Prime |
1% to 2% over Prime |
| Term |
Up to 25 years amortization with no balloon payments |
Up to 25 years amortization with no balloon payments |
Up to 30 years amortization with no balloon payments |
| Prepayment |
5%, 3%, 1% during the first 3 years |
Declining scale during the first 5 years |
Declining scale during the first 5 years |
| Collateral |
1st and 2nd Mortgage / Deed of Trusts, other collateral as required |
1st and 2nd Mortgage / Deed of Trusts, other collateral as required |
1st and 2nd Mortgage / Deed of Trusts, other collateral as required |
| Recourse |
Full guarantee of all owners with 20% or more ownership |
Full guarantee of all owners with 20% or more ownership |
Full guarantee of all owners with 20% or more ownership |
| Loan to Value |
Up to 90% |
50% to 65% for 1st mortgage; up to 90% for all debt |
Up to 90% |
| Debt Service Coverage |
Minimum 1.00x |
Minimum 1.00x |
Minimum 1.00x |
| Equity |
10% minimum |
10% minimum Minimum |
20% tangible net worth for start-ups; 10% tangible net worth for going concerns |
| Management Experience |
At least 2 years in same industry with successful track record in prior business |
At least 2 years in same industry with successful track record in prior business |
At least 2 years in same industry with successful track record in prior business |
| Borrower Eligibility |
Meets SBA requirementso Owner occupiedo Revenue limit of up to $20 million OR no more than 500 employees (depending on NAIC) |
Meets SBA requirementso Owner occupiedo Revenue limit of up to $20 million OR no more than 500 employees (depending on NAIC) |
Meets USDA requirementso Rural area location, population less than 50,000o Stimulates Job Growth |
