What You Need to Know about the SBA 7(a) Loan

There are many common misconceptions about the SBA 7(a) loan program. In reality, the 7(a) loan is designed to help small business owners overcome common barriers to achieving their goals. Whether you’re a seasoned small business owner or an entrepreneur just starting out, here are some quick facts to help you learn more:

USE OF FUNDS

SBA 7(a) loans help small businesses get access to the funds they need to open, operate, and grow. You can use funding from a 7(a) for commercial debt consolidation, real estate, startup or acquisition costs, equipment purchasing, business renovation or expansion, and more.

LOAN AMOUNTS & QUANTITY

One of the main advantages of this SBA program is the high loan amount maximum–those who qualify can borrow up to $5 million. That program maximum can also be comprised of multiple 7(a) loans, meaning that you can take out an initial loan for one purpose, and then pursue additional 7(a) loans if new needs arise, as long as the total borrowed at any given time is under $5 million.

RATES & TERMS

The SBA establishes the maximum interest rates and repayment terms, which correspond to the amount you borrow, and what you use it for. Lenders set their rates independently, not to exceed the SBA maximum. Repayment terms vary from 10 years for most uses to 25 years for real estate, and can also be blended if you’re using funds for a variety of purposes. The longer the term, the lower your monthly payment, which keeps your cash flow healthy while you work towards your goals.

ELIGIBILITY & REQUIREMENTS

Standard requirements have been set by the SBA, and include that eligible businesses must:

  • Operate for profit in the US or its territories
  • Have reasonable owner equity to invest
  • Have sought alternative financial resources before seeking SBA assistance

Other requirements may apply depending on business type, industry-specific opportunities, etc. These criteria can be clearly outlined for you when you work with a qualified SBA lender. An expert partner will take the time to learn about your unique situation, and then work with you step-by-step to complete the application process.

LENDERS

SBA 7(a) loans are offered by many banks, as well as 14 non-bank lenders in the US. Non-bank lenders that may be able to work with additional flexibility to find financial solutions for applicants.

Additionally, applicants may consider seeking a lender that has been certified by the SBA as a Preferred Lending Partner (PLP). PLPs have demonstrated expertise in servicing and processing SBA loans, and are considered experts in SBA procedures and policies. This distinction authorizes these lenders to approve and process your SBA 7(a) loan even faster, by bypassing final approval from the SBA.

WHERE TO START

The first step to getting the funding you need to grow your business is to find an SBA lender you can trust. Do your research to find a lender with a proven track record of speed, 7(a) expertise, and an understanding of the unique needs of business owners like you. To learn more about the 7(a) loan and connect with an SBA expert, click here.

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