Loans $350,000-$5,000,000

SBA 7(a) Loans: $350,000 – $5,000,000

The 7 (a) Loan Guaranty Program is the SBA’s primary program reducing the risk to lenders by guaranteeing major portions of the loans written to small businesses in America. This guarantee enables the lenders to provide financing to businesses when funding is otherwise unavailable to reasonable terms. The eligibility requirements and credit criteria of the program are very broad to accommodate a wide range of financing needs.

To be eligible for an SBA business loan, applicant must;

  • Be located in the United States

  • Be a for-profit operating business

  • Qualify as small under the SBA’s size requirements

  • Demonstrate a need for the desired credit

  • Be certified by a lender that the desired credit is unavailable to the applicant on reasonable terms and conditions from non-Federal sources without SBA assistance.

SBA 7(a) loan applicants must be creditworthy and the SBA requires lender to consider the applicants:

  • Character, reputation and credit history

  • Experience and depth of management

  • Strength of the business

  • Past earnings, projected cash flow and future prospects

  • Ability to repay the loan with the earnings from the business

  • Sufficient invested equity to operate on a sound financial basis

  • Potential for long-term success

  • Nature and value of collateral

Use of Proceeds

Borrower may use 7(a) loan proceeds to establish a new business or to assist in the operation, acquisition, or expansion of an existing business

  • Acquire land (purchase or lease)

  • Improve a site (grading, streets, parking lots, and landscaping)

  • Purchase one or more existing buildings

  • Convert, expand , or renovate one or more existing buildings

  • Construct new building

  • Acquire (via lease or purchase) fixed assets

  • Purchase inventory, supplies and raw materials

  • Finance working capital

  • Refinance certain outstanding debts

Borrowers are prohibited from using 7(a) loan proceeds to;

  • Refinance existing debt where the lender is in a position to sustain a loss and the SBA would take over that loss through refinancing

  • Effect a partial change of business ownership or a change that will not benefit the business

  • Permit the reimbursement of funds owed to any owner, including any equity injection or injection of capital

  • Repay delinquent state or federal withholding tax

  • Pay for a non-sound business purpose

Loan Terms

7(a) loans require the shortest appropriate term, depending upon the borrower’s ability to repay. The maximum term is 10 years, unless the loan finances or refinances real estate or equipment with a useful life exceeding 10 years. In that case, loan term can be up to 25 years.

504 Loan Program Eligibility

  • Operate as a for profit company in the US or its possessions Has a tangible net worth less than $7.5 million and an average net income less than $2.5 million after taxes for the preceding two years.Loans cannot be made to business engaged in speculation or investment in rental real estate

  • Ability to repay the loan on time from the projected operating cash flow of the business

  • Management Expertise and good business plan