SBA 7(A) Loans
SBA provides loans to businesses; so the requirements of eligibility are based on specific aspects of the business and its principals. If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business. All programs and rates are subject to change at any time.
| Lending Criteria | 7(A) Program |
| Maximum Loan Amount | $5 million |
| Percent of Guaranty | 85% guaranty for loans of $150,000 or less; 75% guaranty for loans greater than $150,000 (up to $3.75 million maximum guaranty) |
| Use of Proceeds | Term Loan. Expansion/ renovation; new construction, purchase land or buildings; purchase equipment, fixtures, lease-hold improvements; working capital; refinance debt for compelling reasons; seasonal line of credit, inventory or starting a business |
| Maturity | Depends on ability to repay. Generally, working capital & machinery & equipment (not to exceed life of equipment) is 5-10 years; real estate is 25 years. |
| Maximum Interest Rates | Loans less than 7 years:
Loans 7 years or longer:
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| Guaranty Fees | (No SBA fees on loans of $150,000 or less approved in FY 2016.) Fee charged on guarantied portion of loan only. $150,001-$700,000 = 3.0%; $700,000- $1,000,000 = 3.5%; plus 3.75% on guaranty portion over $1 million, less than 12 months .25% Ongoing fee of 0.473% on loans over $150,000. |
| Who Qualifies | Must be a for-profit business & meet SBA size standard; show good character, credit, management, and ability to repay. Must be an eligible type of business. Prepayment penalty for loans with maturities of 15 years or more if prepaid during first 3 years. (5% year 1, 3% year 2 and 1% year 3) |
| Benefits to Borrowers | Long-term financing; Improved cash flow; Fixed maturity; No balloons; No prepayment penalty (under 15 years) |
| Closing Time Frame | 30 – 45 Days |
| Broker Origination | 1 point + $1,495 Processing fee – subject to minimum loan amount. |