SBA loan form on a table. Concept: SBA loans vs Camino Financial loans
Derek Tallent
By: dtallent
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SBA Loans vs. Camino Financial Business Loans

As a business owner, you know that applying for a loan usually is not a simple task, especially considering that there are so many types of loans to choose from. Among the most popular are the SBA loans (a loan from the U.S. Small Business Administration). They tend to loan out large amounts of money and can have lower interest rates than some other lenders. There are also some negatives to SBA loans, however, which we will cover later. In this article, we will go over the pros and cons of SBA loans and compare them with Camino Financial business loans to give you an idea of which loan might be best for your business.

How do SBA Loans Work?

SBA loans are loans from the government offered through banks and other cooperatives. SBA loans are essentially loans that are guaranteed by the SBA, which means that if you default on the loans the SBA will be on the hook for the remaining debt. The main drawbacks of SBA loans are the long process and the strict requirements that candidates must meet to qualify. Refer to this article to see if your business could qualify for an SBA loan.

The following are the two main types of SBA loans:

SBA 7(a) Loan

The SBA 7(a) loan is the primary loan given out by the SBA. These are loans given to those who can demonstrate a need for funding and have a solid plan for use of the funds to improve their business. Here are some of the details regarding SBA 7(a) loan:

  • Max Loan Amount- One of the most attractive aspects of 7(a) loan is that up to 5 million dollars can be financed in these loans.
  • Annual Interest Rate (APR)- The interest rates for SBA 7(a) loans typically range from 7.75% to 10.25%.
  • Requirements- Collateral (accounts receivable, machinery, real estate) is required to secure most 7(a) loans. You will also need to provide your Social Security Number or your Tax ID if you are a registered entity. Other requirements are a credit score of at least 680, significant management experience (years your business has operated) and at least 1.25 times your debt service coverage ratio.
  • Process- The biggest downside of a 7(a) loan is the application process is stricter and longer than most loans. It takes approximately 60 to 90 days for the application process to complete and longer for the funds to be administered.

SBA CDC 504 Loan

These loans are provided by Certified Development Companies, which are non-profits that work with the SBA and banks to fund them. These loans are typically only given to companies that are accomplishing some community objectives, such as creating new jobs, contributing to environmental development, or helping the less fortunate. Here are some details on CDC 504 loans:

  • Max Loan Amount- CDC 504 loans usually also have a maximum loan amount of 5 million dollars.
  • Annual Interest Rate (APR)- Interest rates for CDC 504 loans tend to be lower than 7(a) loans, ranging from 4.39% to 4.70%.
  • Requirements- To get a CDC 504 loan you will need a credit score above 650, a debt service coverage ratio of at least 1.2%, the ability to put 10-15% of the loan down upfront, and as mentioned before the loan must be put toward achieving some sort of community objective.
  • Process- Getting a CDC 504 loan can be a very long process. The issue is that the loan must be approved by both the SBA and the CDC it is coming from. Because of this, it can take anywhere from 1 to 6 months in order for one of these loans to be fully funded.

Camino Financial Small Business Loans

At Camino Financial, we also offer small business loans along with assisting business owners at every step of the loan process. Here are the key details of our offered business loans:

  • Max Loan Amount- Camino Financial focuses on smaller business loans compared to SBA loans, maxing at $400,000 per loan.
  • Annual Interest Rate (APR)- We offer interest rates ranging from 12.00% to 40.00% depending on the loan amount, the loan term, and each borrower. Refer to this post to see how Camino Financial calculates its interest rates.
  • Requirements- In order to qualify for a Camino Financial small business loan, your business should have been operating for at least 9 months and bring in at least $30,000 annually (or $2,500 monthly), and you must own at least 50% of the business. And that’s it! You can invest the capital from your business loans for a multiple of purposes: Camino has very limited restrictions in the use of funds. Camino has notoriously fewer requirements than most lenders and doesn’t require collateral to secure your loan, a Social Security Number (applicants with only an ITIN are accepted) or credit history.
  • Process- We pride ourselves in getting business owners their funds as soon as possible. Once you are approved for a loan you’ll receive the funds directly in your bank account within the next 2-10 days. Note the difference with SBA loans: our streamlines process and high technology allow for a short funding time. Read this article to see how we make this possible and how it can benefit you as a business owner.

Why Else Should You Consider Camino Financial?

Camino Financial loans do not just provide fast funding time and have fewer requirements than SBA loans. Here are a few more benefits that Camino Financial business loans provide:

  • Apply Online- You can apply for all of our loans online in an easy, streamlined process. You can apply for these loans from the comfort of your home or workplace and know instantly if you are pre-qualified.
  • Future Loans- If you make timely payments for at least 9 months on your current loan, you can step up your loan to a higher amount with lower interest rates.
  • Fixed Terms- All terms of our loans are fixed, which means you will pay the same rate across the entire lifetime of the loan.
  • No Early Payment Penalties- There are no penalties for paying off your loan earlier and at any time.
  • Personalization- We match you with the best financial solution that is right for your unique needs. We ensure you are comfortable with the monthly payments and the return on investment you’ll make with the loan will surpass its cost.
  • Knowledgeable Loan Experts- Our loan experts are bilingual and have years of experience in helping business owners find the right loan for their business.
  • Continued education- You’ll have access to resources to improve your financial performance and to other exclusive benefits like invitations to events and discounts on selected business products.

While the cost of a loan from Camino Financial can be higher than an SBA loan, this is clearly compensated by the many benefits they provide that you won’t find in an SBA loan. You have to consider if the extra cost is worth all you can get in return: minimum requirements, fast and easy process, quick funding, and more.

If you are ready to take the first step to grow your business, simply submit your online application to know instantly if you pre-qualify and to receive a loan quote. This won’t affect your credit and shortly one of our loan specialists will contact you to guide you through the rest of the process.



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