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Small Business Administration 7(a) Loan

Download Your Small Business Administration 7(a) Loan Application Here.

Small Business Administration loan products are regularly updated. Programs and terms do change. Use the information on this page as a good starting point to understanding Small Business Administration loan products.

Documentation Requirements

The Small Business Administration 7(a) loan requires full personal and business documentation and a minimum FICO credit score of 600.

Full documentation includes three years of business and personal financial statements, all assets, liabilities, monthly payments and cash flow projections, personal taxes and income, and collateral equal to or greater than the amount of the loan.

New startup businesses requirements include a full business plan, cash flow projections for three years and full collateral to guarantee the loan.

If you are able to qualify, Small Business Administration loan programs lend to small businesses with very reasonable terms.

Loan Providers

Small Business Administration loans are provided through private-sector lenders. Many small businesses turn to Small Business Administration financing because they are unable to secure financing through traditional business lending channels.

Loans are available for a wide range of business needs, including start up and expansion, debt refinancing, purchasing commercial real estate, business acquisition, construction and equipment purchase.

Key Benefits

Small Business Administration loans offer businesses many advantages over traditional financing including lower interest rates and more attractive terms.

Key Benefits of Small Business Administration 7(A) Loans

  • Loans up to $6,000,000
  • Lower interest rates
  • Lower down payments
  • Longer repayment terms
  • Lower payments
  • No balloon payments
  • Higher approval rates


Small Business Administration 7(a) Loan Program

The 7(a) Loan Program is the Small Business Administrations’ primary program to help start-up and existing small businesses obtain financing. The Small Business Administration itself does not make loans, but rather guarantees a portion of loans made and administered by commercial lending institutions.

 7(a) loans are the most commonly used loan. They are also the most flexible, since financing can be guaranteed for a variety of general business purposes, including working capital, machinery, equipment, furniture, fixtures, land and buildings (including purchase, renovation and new construction), leasehold improvements and debt refinancing (under special conditions).

Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets.

There are guarantee and servicing fees associated with this loan that are determined by the amount of the loan and the portion that is guaranteed. These fees may be passed along from the lender to the borrower.

Loans that fall under the 7(a) guaranteed loan program:

  • The Small Business Administration Low Documentation Program streamlines the making of small business loans up to $150,000. It features a one-page application and a 36 hour response time.
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Download Your Small Business Administration 7(a) Loan Application Here.




Funding Programs Seen In







 

  • Small Business Administration Express Loans (term or revolving credit) lenders are permitted to use their own forms, analysis and procedures to process the loans and to approve term loans and lines of credit of up to $350,000.
  • Cap Lines (Lines of Credit) help small businesses meet their short-term and cyclical-term capital needs. The five available credit lines include a seasonal line of credit, a contract line, a builder’s line, a standard asset-based line and a small asset-based line.
  • The Export Working Capital Program (EWCP) is a combined effort of the Small Business Administration and the Export-Import Bank to provide short-term capital to exporters. It features a one-page application form and streamlined documentation. EWCP loans usually have a 10-day or less turnaround time.

Eligibility Requirements

To be considered for a 7(a) loan, applicants must meet certain eligibility requirements. These requirements are designed to be as broad as possible so the program can accommodate the most diverse variety of small business financing needs. Some of the basic requirements are:

·         Operate as a for-profit company.  

·         Do business (or propose to) in the United States.  

·         Meet Small Business Administration size standards.

·         Be an eligible type of business. While the vast majority of businesses are eligible for financial assistance from the Small Business Administration, some are not. Ask your provider for eligibility requirements. 

·         Plan to use loan proceeds for an approved purpose. 7(a) loan proceeds may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business.  

·         Not have funds available from other sources. The Small Business Administration does not extend financial assistance to businesses when the financial strength of the individual owners or the company itself is sufficient to provide all or part of the financing. Both business and personal financial resources are reviewed as part of the eligibility criteria. If these resources are found to be excessive, the business will be required to use those resources in lieu of part or all of the requested loan proceeds. 

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

·        Good character. The Small Business Administration obtains a "Statement of Personal History" from the principals of each applicant firm to determine if they have historically shown the willingness and ability to pay their debts and whether they have abided by the laws of their community. 

·         Management expertise and commitment necessary for success. 

·         A feasible business plan. 

Small Business Administration FAQ’s

How do I know if I qualify as a small business?
Approximately 95% of all businesses are eligible for Small Business Administration assistance. Size standards vary widely depending upon the industry. As a general rule your business is within Small Business Administration size limits if it is in manufacturing or wholesaling with fewer than 100 employees or in retailing or service with annual sales under $5,000.000

How long does it take to obtain an Small Business Administration loan?
It can take as little as 30 days to as long as 6 months or more.

Will I be required to personally guaranty an SBA loan?

Yes. Almost all Small Business Administration loans will require a personal guaranty. If a business owner defaults on the loan they will be required to repay the loan personally. It is also common for the business owner to pledge personal assets and real estate to secure the loan.


Can SBA Loans Be Used To Refinance Business Debt?

Yes, under the following conditions:

  • The Small Business Administration requires proof that the original loan (which may since have been refinanced or renewed) and subsequent financing were used for a valid business purpose.
  • The Note has to be fully secured.
  • There must be a tangible business benefit from refinancing the existing debt.

Can you start a new business with an SBA loan?

Yes, the Small Business Administration encourages organized and qualified entrepreneurs to apply for start-up financing. The typical requirements are:

  • The borrower must have experience in the line of business.
  • The borrower’s cash injection must be at least 33% of the total project cost.
  • There must be sufficient collateral for the loan.
  • A detailed Business Plan including projections will be required.
  • The borrower must have a clean personal credit history.
  • The proposed business cannot be speculative or high risk.

If I had previous credit problems, can I still qualify?
It is possible to qualify for a Small Business Administration loan with previous credit problems. A full written explanation of the derogatory items will be required and all open accounts must be current and paid as agreed.

Download Your Small Business Administration 7(a) Loan Application Here.

 

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