An SBA 7(a) loan is a loan program offered by the U.S. Small Business Administration (SBA) designed to help small businesses obtain financing.
What can 7(a) loans be used for?
- Short and long term working capital
- Obtaining, restructuring, or enhancing properties and facilities
- Refinancing current business debt
- Purchasing machinery, equipment, furniture, fixtures, and supplies
- Purchasing a company (complete or partial)
What is the maximum loan amount?
Currently the SBA 7(a) program allows a maximum loan amount of $5 million.
Who is eligible?
To be eligible for 7(a) loan assistance, businesses must:
- U.S. based
- Profitable company
- Operating business
- Be small under SBA Size Requirement
- Not be a type of ineligible business
- Possess a good credit standing and show a credible capacity for loan repayment.
- Not be able to obtain the desired credit on reasonable terms from non-Federal, non-State, and non-local government sources.
You can find out more about the terms and conditions by visiting the SBA’s website.
What are the payback terms?
Repayment conditions for loans differ based on multiple elements.
- Typically, 7(a) term loans are settled through monthly disbursements of principal and interest derived from the business’s cash flow.
- For fixed-rate loans, installments remain consistent due to the unchanging interest rate.
- In the case of variable rate loans, the lender might adjust the payment sum when there’s a fluctuation in the interest rate.
How do I apply?
You can speak with your local bank or use a broker to find you the best bank to process your loan. While the SBA has set guidelines, each bank can have separate criteria to process your loan.
Does it cost to use a broker?
Typically, no. Most brokers (or packagers) are paid by the bank.
Ready to move forward?
If you are ready to get a SBA 7(a) loan, book a time below to schedule a consultation.