What is an SBA 7(a) loan?
An SBA 7(a) loan is the most used of the SBA loan programs due to its flexibility. Loans can from less than $100,000 up to a maximum of $5,000,000 and can be used for a wide variety of purposes including working capital, purchasing or renovation of equipment, purchasing real estate, debt refinancing, and starting or acquiring a new business under certain circumstances. Maximum maturity is up to 10 years for working capital and 25 years for fixed assets. Interest rates and other terms of the note can be flexible depending upon the lending institutions policies.
The SBA does not make 7(a) loans directly but guarantees a portion of the loan that is made by a partner bank or non-bank lender. For example, if you received an SBA 7(a) loan for $1,500,000 to purchase and equip your new dental offices from your lender, the lender would process and underwrite the loan using the SBA 7(a) standards and guidelines and would apply to the SBA for a guarantee of a portion of your loan. This will allow the lender to provide access to funds for projects they may not normally be able to due to any variety of internal risk factors.
For information on how an SBA 7(a) loan could help you acquire or grow your business, fill out the contact form below:
