What’s the Difference Between SBA Loans and Unsecured Business Loans?

unsecured business loans

SBA Loans vs. Unsecured Business Loans

SBA loans and Unsecured Business Loans both have their pros and cons. But do you know which one is right for your business?

With an SBA loan you can acquire real estate for your business. For example, if you’re already paying rent for your office space, you might as well build equity in an asset by purchasing the office for your business.

We are at historically low interest rates, so this is a great time to acquire an asset.

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Let’s assume you apply for a SBA loan with your local bank. Let’s pretend you are looking to buy an office for $500,000.

Option A: Conventional Loan

  • 75% to 80% LTV (Loan to Value)
  • $375,000 – $400,000 financed amount

Option B: SBA 7(a) Loan

  • 90% LTV (Loan to Value)
  • $450,000 financed amount

Option C: SBA 504

  • 90% LTV (Loan to Value)
  • 1st Mortgage 50% LTV with the financed amount of $250,000
  • 2nd Mortgage 90% CLTV (Combined Loan To Value) with the financed amount of $200,000

That second mortgage is a government guarantee bond, which is very inexpensive.

Most loan officers both in residential loans and SBA loans are compensated based on the premium made off the loan. So what that means, is the higher the loan amount the more the bank makes and more the bank makes the more the loan officer makes. Typically if your business is not in the position to put 20% to 25% down payment like in example A, they’ll offer you option B the SBA 7(a) loan. When that bank sells your loan to the secondary market, the government guaranteed portion will pay out up to 12% premium on that loan. The government guaranteed portion is 75% of the financed amount on the SBA 7(a) loan.

Make the Right Decision

Office Purchase Price $500,000

  • SBA 7 (a) $450,000 financed amount at 90% LTV
  • Government guaranteed portion $337,500 (75% of the financed amount)
  • Up to 12% premium will be paid out to the lender/bank who originates the loan $40,500

Now let’s get back to the original question at hand: the difference between Unsecured Business Loans and SBA Loans. Read on to find out more!

unsecured business loansWhat’s the difference between SBA Loans and Unsecured Business Loans?

First Capital Business Finance offers a wide variety of alternate funding solutions such as our business cash advance.

Our business cash advance program is based off your credit card sales, whereas SBA loans take a deeper look at the entire business, credit profile, assets, and so much more.

When working with your loan officer for an SBA loan, they will typically be local to your place of business. We deal with companies nationwide and have the ability to lend in all 50 states.


We can lend in all 50 states.


If capital is what you need, and time is not on your side, you should consider a Business Cash Advance program. Funds can be wired to your business account in as little as 5-10 business days. You can’t get that type of time frame with a SBA loan.

First Capital’s business cash advance program also has a fraction of the qualifications and paperwork to be approved. Our average approval time frame is 48 hours – unlike your traditional SBA loan, which can take days or weeks to get approved. The application is only 2 pages long, and can be completed here on our secured website. If you’re interested in hearing more about our loan programs, please feel free to call 888-565-6692 and one of our loan experts will be happy to answer any of your questions.

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What’s the Difference Between SBA Loans and Unsecured Business Loans? | First Capital Business Finance



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