two women working together at a small business

Getting a Small Business Loan can be Essential to Financing Your Venture

For those starting or growing a business, getting a small business loan is one of the first steps. With more than two decades of professional commercial lending experience, AVANA CUSO can aid a small business owner in acquiring or financing the real estate occupied by their business, by offering an SBA 504 loan via our partner credit unions. Additionally, to facilitate access to working capital, we lean on our sister company LendThrive, which offers loans of up to $150k direct to borrowers.

Below, we outline how to get a loan to grow your business.

6 Steps to Getting a Small Business Loan

Step 1: Establish the loan amount you need to finance your business plan.

Step 2: Determine the type of business loan you need. There are three major types of small business loans available: 7(a) loans, 504 loans and microloans.

Step 3: Get your finances in order by building your business and personal credit scores and gathering financial documents such as income tax returns, bank statements, balance sheets, cash flow statements, commercial leases, business licenses and articles of incorporation. It’s also important you have collateral—either business or personal—to back the loan.

Step 4: Ensure you meet the necessary eligibility requirements. Small Business Administration (SBA) loans have several qualification requirements. For example, an SBA 504 loan requires you operate a for-profit company in the United States, have a net worth of less than $15 million, have an average income of less than $5 million and have a down payment of approximately 10%.

Step 5: Compare small business loan lenders’ annual percentage rates, terms and fees. Speak with your local credit union(s) to explore loan options or work with LendThrive. Choose the lender that works best for you and your business.

Step 6: Complete the small business loan application at your preferred lender.

How Do Business Loans Work?

Although the SBA doesn’t lend money directly to small business owners, it sets guidelines and eligibility requirements for loans made by its lending partners. The SBA makes it easier for small businesses to obtain financing by reducing the risk for lenders.

There are three major financing options available:

1. SBA 504 Loan

SBA 504 loans, together with a conventional loan from a credit union, can provide long-term, fixed-rate financing of up to $20 million for assets that promote business growth. They can be used to purchase or refinance existing buildings, construct new facilities, or acquire long-term machinery and equipment. 504 loans can only be used for financing real estate in which the small business borrower occupies at least 50% of the space with its own business operations.

2. SBA 7(a) Loan

The most common of the three loan options, the SBA 7(a) loan, can be used for short- and long-term working capital, to refinance current business debt or to purchase furniture, fixtures and supplies. The maximum loan amount is $5 million.

3. Microloan

A microloan can provide up to $50,000 for small business owners and select nonprofits. It can be used as working capital or for inventory, supplies, furniture, fixtures, machinery or equipment.

Small Business Loan Terms & Interest Rates

SBA loan programs typically provide longer-term small business loans, rather than short-term loans. The maximum small business loan terms for real estate are 25 years and 10 years for equipment and working capital. Repayment period terms are determined on an individual basis, factoring in ability to repay, purpose of the loan and useful life of the assets financed.

Although interest rates are negotiated between the lender and borrower, they are limited by SBA maximums. For variable rate loans ranging from $25,000 to more than $50,000, interest rates can run from Prime + 2.25% to 4.75%. Fixed loan rates for loan amounts running from $25,000 to more than $250,000 can range from 5% to 8%, according to the SBA. The debentures on SBA 504 loans are 25-year fixed rate loans with rates currently around 3%.



Established in 1998 and headquartered in Simi Valley, CA, AVANA CUSO offers competitive commercial real estate loans. We partner with credit unions and connect them to investors across the United States. Additionally, we uniquely support and guide our partners through the entire small business loan process. AVANA CUSO is a proud member of the AVANA Family of Companies.