How to Get an LLC Loan Through the SBA

September 28, 2023

Starting a new Limited Liability Company (LLC) in Texas is an exciting venture but may come with significant financial challenges as you launch your business off the ground. One valuable resource available to small business owners is the Small Business Administration (SBA), a federal agency that guarantees business loans to help new and growing companies thrive.

Today, we will cover the main types of SBA loans, the advantages of SBA loan programs, and how to get an LLC loan with SBA backing from Texas Gulf Bank.

In addition, learn how our SBA Loan Specialist Dennis David can provide expert guidance and help you through each step of the loan application process.

The Purpose of the SBA

The SBA is dedicated to supporting small businesses across America by providing access to capital and offering educational business resources. Without this type of funding access, it can be difficult for small business owners to secure the types of business loans needed for long-term success, especially for newer LLCs that lack significant credit history or high credit scores.

SBA loans are an attractive option for new and growing companies to secure the loans needed to get a business off the ground. To qualify for an SBA loan, your LLC must first meet federal eligibility guidelines regarding your business, including:

Being a for-profit LLC
Business is located and operates in the U.S.
Having a sound business plan
Meeting size guidelines for a small business
Demonstrating inability to obtain a loan from traditional banks or other lenders

Certain businesses will not be eligible to apply for SBA loans based on their specific location, industry, or the risky nature of their company. For example, non-profit businesses, those operating outside the U.S., and businesses of certain industries (speculative, gambling, and others) are ineligible for SBA loans.

If you meet the SBA federal standards for small businesses, you may be the ideal applicant for an LLC loan to meet your business needs.

How to Get An LLC Loan: Discover the Main Types of SBA Loans

The SBA offers several loan programs, but two of the most commonly utilized options are the SBA 7(a) and SBA 504 loans. Let’s take a closer look at each one of these potential SBA lending options for your business.

SBA 7(a) Loan

The ideal loan solution for your new LLC is one that allows you to improve your business and make the investments needed to spur growth. The SBA 7(a) loan is the most popular SBA loan for LLCs and can be used for various business purposes, including:

Purchasing or renovating commercial real estate
Meeting working capital needs
Purchasing equipment and machinery
Acquiring inventory
Buying furniture, fixtures, and business supplies
Refinancing business debt

Borrowers may be approved for SBA 7(a) loan amounts of up to $5 million. The flexibility of SBA 7(a) loans makes them a popular choice for LLCs in need of strategic funding for their business.

SBA 504 Loan

If your LLC has a funding need primarily for real estate and equipment purchases, SBA 504 loans may be the loan choice for a business. This long-term loan enables a business to acquire major fixed assets needed for growth and business expansion without depleting a business line of credit or relying on accounts receivable loans to pay for long-term business investments.

Unlike other types of business loans, including the SBA 7(a) loan, an SBA 504 loan is available through Certified Development Companies (CDCs), which are community-based partners that promote economic development within their region.

SBA 504 loans can be used for several different purposes, including:

Land acquisition
New facility construction
Building renovations
Co-owner buy-out
Buying long-term equipment and machinery
Land and street improvements
Utility upgrades

These small business loans offer up to 90% of loan financing, with 50% provided by a traditional lender, 40% from the CDC, and 10% as a down payment from the borrower. SBA 504s are typically structured with a lower down payment requirement, with a maximum loan amount of up to $5.5 million, depending on the project.

Why Choose an SBA Loan for Your LLC?

With so many loan options available, choosing the right loan for your LLC can be a daunting task. You want to ensure you are choosing a loan that ultimately strengthens your company and fits within your company’s ability to repay the loan. Choosing an SBA loan offers several distinct advantages compared to conventional loan options.

1. Access to Capital

SBA loans may offer substantial funding options, allowing you to secure the capital needed to grow your business. With loan amounts available of up to $5 million, your LLC could have access to funds that potentially change the trajectory of your business.

2. Credit History Flexibility

SBA loans take into account your business credit scores and credit history, but you could still be entitled to SBA lending even with less-than-perfect credit. Entrepreneurs striving to improve their credit scores could be approved for SBA lending when they might not otherwise be eligible for conventional loans.

3. Protection of Personal Assets

SBA loans usually do not require personal assets as collateral, protecting your personal finances while supporting your business. This minimizes your own personal risk while also ensuring you have access to the funds your LLC needs.

4. Working Capital Support

For small business owners in need of working capital, SBA loans can provide the necessary funds to keep operations running smoothly. This benefit could help improve operational efficiency and ensure you have the ability to cover daily expenses and obligations.

Apply for an SBA Loan with Texas Gulf Bank

For over 110 years, Texas Gulf Bank has supported small businesses throughout the Southeast Texas Gulf Coast region by offering effective lending solutions and banking services. As an SBA lender, we have extensive experience in guiding businesses through each step of the SBA loan process.

Specifically, our dedicated SBA loan specialist Dennis David is ready to help you get started with the SBA loans you need for your LLC. Dennis has been with Texas Gulf Bank since 2014 and has helped countless small business owners launch new ventures, purchase or construct a new facility, or support growth initiatives in their existing business.

In addition to providing expert guidance on SBA eligibility, loan amounts, and loan options, Dennis will navigate you through each facet of the loan application to expedite the process. Dennis will help you with the process of providing us with the following information to help you apply for an LLC loan including but not limited to:

Completed bank loan application
Your equity in the business or project
Personal and business bank statements
Historical and/or projected revenues
Net income
Cash flow
Education and/or work experience

Get Started Today with Texas Gulf Bank

We value building strong working relationships with clients. You can expect to receive personalized support throughout the entire SBA loan approval, closing, and funding processes. We will then follow through with guidance on how to use SBA funds for their approved purpose if you are approved for financing.

For more information on how to get an LLC loan through the SBA, contact Texas Gulf Bank to speak with our lending team today. Dennis David and our entire team look forward to helping your business grow and thrive.

All loans subject to credit approval.