SBA 7(a) loans are provided by authorized commercial lenders like who participate in the program. The participating lender funds the loan and receives a guarantee of up to 75% of the loan amount from the SBA. This allows us to make loans to businesses that might not qualify for financing from other lenders. In addition to funding the loan, the participating lender is also responsible for administering the loan throughout its life.
All 7(a) loan applicants must meet the program's eligibility requirements, which are designed to be as broad as possible. Businesses must meet SBA size standards, must be "for-profit", must be without internal resources to provide the financing, and must be able to demonstrate repayment ability.
Loan Details
- SBA 7(a) loans can be used to purchase commercial real estate, machinery and equipment, fixtures and furniture, inventory and other business assets; to provide working capital; and to pay loan closing costs. SBA 7(a) loans can also be used to refinance certain loans.
- Loans range from $250,000 to $2,000,000.
- Commitment Letter within 3 days of completed application!
- Closing within 30 – 45 days of signed commitment letter.
- Up to 90%.
- Floating rates, up to 2.75% over the Wall Street Journal Prime rate, adjusting monthly.
- Up to 25 years, fully amortizing over the life of the loan.
- The term offered is
based upon the use of
loan proceeds. Terms for
assets categories are as
follows:
- Real estate – up to 25 years.
- Working capital – 7 to 10 years.
- Machinery and Equipment – based on the useful life of the asset
- Prepayment penalties will apply.
- A one time SBA guarantee fee based on the dollar amount being guaranteed.
- Good faith deposit to be used for loan closing costs.
- Loans must be fully secured by commercial real estate or a combination of commercial real estate, residential real estate, machinery and equipment, and fixtures and furniture.
- All principals who own 20% or more of the business are required to provide a full guarantee. Principals or key managers owning less than 20% may be required to provide a guarantee on a case-by-case basis.
- The guarantee of affiliated companies may be required based on the percentage of ownership of the affiliate and the borrower's relationship with the affiliate.
- A minimum projected debt service coverage ratio of 1.25 times is required.
- Loans can be made to all businesses except those that do not meet SBA 7(a) eligibility requirements. These are primarily firms involved in real estate investment/speculation, gambling, adult entertainment, lending money and pyramid sales schemes. Firms involved in nuclear waste, utilities, natural resource development, fishing vessels, biotechnology and internet technology are also excluded from eligibility.