The Basics: Small Business Administration Loans

In response to the recent credit crunch, the Small Business Association (SBA) is eliminating fees and increasing its guarantees up to 90% on some small business loans, including Section 7(a) and Section 504 loans. Additionally, the SBA has introduced the ARC (America's Recovery Capital) loan program as part of the American Recovery and Reinvestment Act. NAR has recently received confirmation that REALTORS®—as independent contractors—are eligible to apply for ARC loans. 

Latest news: 
House and Senate Introduce Bills to Increase SBA Loan Limits (Dec. 21)

Section 7(a)and Section 504 Loans

Borrowers apply for these loans directly with their lending institutions, which can include banks, credit unions, and small business lending companies. The lender, however, must be SBA approved.  The lender will evaluate applications based on conventional lending standards and will opt to either: make the loan through conventional financing; make the loan using an SBA guarantee; or decline to make the loan. 

Section 7(a) loans are available for up to $2 million and Section 504 loans are available between $2 and $4 million, although, they do vary widely. 

For more information about: which loan type may be right for your business, eligibility requirements, and answers to frequently asked questions, please see NAR's 7(a) and 504 Eligibility Flyer and FAQ. 

America's Recovery Capital Loans (ARC)

Under this program, the SBA will provide one loan of up to $35,000 to small businesses for short-term relief from financial hardship to help these businesses weather the current difficult economic climate. ARC loans will be offered through SBA lenders through September 2010, or until the funding runs out.

To find out more about eligibility requirements and how to apply, please visit the SBA's ARC Loan Program. .