Why Use SBA 7(a) Loans?

SBA 7(a) Loans are long term, government backed, guaranteed lending for working capital, inventory, equipment, and real estate use for your business. A 7(a) loan, unlike a typical commercial bank loan, can get you up to 90% financing of your total project cost. This is the first and most important benefit -- by using a SBA 7(a) loan you can free up valuable capital for operational uses in your business. 7(a) loans offer a long term financing structure that are typically floating rates over the life of the loan.

SBA 7(a) Benefits For Borrowers

  • Offers more flexibility for loans to be used for working capital, intangible assets, and inventory
  • The term for a 7(a) can be determined by maximum term for the assets class comprising the largest use of proceeds, with no call provisions or balloons. Example: $500,000 to buy a building, $350,000 for equipment would qualify for a 25 year term.
  • Only a 3-year prepayment penalty for loans 15 years or more and no prepayment penalty for loans less than 15 years
  • Significantly lower injection of equity
  • Increased available capital

      SBA 504 Benefits For Lenders

      • 1st Lien position with SBA guaranty for 75% of the loan
      • Additional income opportunities in secondary market
      • Minimal equity injection requirements helps lenders compete for more business

      Eligible Use of Funds

      • Working Capital
      • Business Acquisition
      • Construction
      • Real Estate
      • Equipment
      • Inventory

      Interest Rate and Terms

      • Floating Rate -- based on the WSJ Prime Rate
      • Up to a 5-year term for real estate
      • Up to a 10-year term for working capital, inventory, and equipment

      Borrower's Injection

      • A minimum of 10% equity for working capital, inventory, and real estate
      • For business acquisitions, if intangible assets are $250,000 or greater, the injection must be 25% to be processed through Preferred Lender procedures