SBA 7(a) Loans

The 7(a) loan program is the SBA’s main program for helping start-up and existing small businesses. The SBA 7(a) loan programs has numerous types of loan including: the Standard 7(a), 7(a) Small Loan, SBA Express, Export Express, Export Working Capital, and International Trade. Most 7(a) loans have a maximum loan amount of $5 million. However, SBA Express loans have a maximum loan amount of $350,000. SBA Export Express loans have a maximum loan amount of $500,000. Funds under the 7(a) programs are to be used for a Sound Business Purpose (i.e., LTWC, construction, acquisition of equipment, business acquisition, and/or refinance existing debt). Loan maturities for SBA loans are: 25 years for real estate; 10 years for equipment; and 10 years of working capital or inventory. Interest rates are typically pegged to the prime rate, the LIBOR rate, or an optional peg rate, and the rates may be fixed or variable. For most 7(a) loan programs, the SBA guarantees loans made by the participating lender institution. While the vast majority of businesses are eligible for financial assistance from the SBA, some are not. The required documentation to be signed by Borrowers for a 7(a) loan are: the Note (Schedule A) – except SBA Express, Settlement Sheet, Compensation Agreement (for each required agent), Equal Opportunity Poster, 4506-T, Tax Return Verification, Agreement of Compliance (Construction >$10k), Guarantees, and the Standby Agreement. Depending on the Loan criteria, additional documentation may include: a Mortgage, Assignment of Leases, Security Agreement, Landlord Consent, Borrower / Guarantor – entity resolutions, and Borrower’s Certification. Please visit the United States Small Business Administration website for more details on the 7(a) loan program.