The SBA or Small Business Administration guarantees loans for businesses in certain industries that meet the SBA lending criteria. These loans are made by banks or other commercial lending institutions and not by the SBA directly. If a business meets the lending criteria the SBA can guarantee as much as 80 percent of the amount the business borrows. Lenders look much more favorably on this type of loan request because they have significantly less exposure if the business defaults on the loan. There a number of different SBA programs but the two major categories are called “7-A” and “504”. Loans funded under the 7-A program can be used for many different purposes including start-up capital, working capital, franchise purchases, equipment financing, etc. Loans made under the 504 program are much larger and designed to help businesses purchase owner-occupied commercial real estate. The maximum loan amounts for these programs can change from year to year. BFC’s can make 1-2 points on the transaction amount.