What is SBA Loan (Small Business Administration)?
A loan partially guaranteed by the U.S. Small Business Administration, reducing lender risk and enabling access to capital for small businesses that might not qualify for conventional financing.
SBA Loan (Small Business Administration) in commercial lending practice
The most common SBA programs are 7(a) for general business purposes and 504 for real estate and equipment acquisition. SBA loans have specific underwriting requirements including global cash flow analysis on all guarantors, FCCR minimums (typically 1.15x for 7(a)), eligibility documentation, and use-of-proceeds tracking. Preferred Lender Program (PLP) status reduces SBA review time but increases the lender's underwriting documentation responsibility.
Related terms
Related concepts in commercial underwriting
Fixed Charge Coverage Ratio (FCCR)
A broader coverage metric than DSCR that includes all fixed obligations — debt service plus lease payments, insurance, taxes, and other recurring costs.
Read definitionGlobal Cash Flow Analysis
An underwriting approach that consolidates the cash flows of all related entities and guarantors — not just the borrowing entity — to assess total repayment capacity.
Read definitionCredit Memo
A formal written analysis prepared by a loan officer or credit analyst that summarizes a borrower's creditworthiness, the proposed loan structure, risk factors, mitigants, and a recommendation to approve or decline.
Read definitionSchedule K-1
A tax form (Form 1065 K-1, 1120-S K-1, 1041 K-1) that reports a partner's, shareholder's, or beneficiary's share of income, deductions, and credits from a partnership, S-corporation, or trust.
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How SBA Loan (Small Business Administration) shows up in AI underwriting
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