March 11, 2010 | Home

7(a) Loan

Unlike the 504 Loan program where there is more of a focus on real estate financing, 7(a) loan proceeds can be used to purchase equipment, inventory, expand and/or renovate facilities, provide working capital or to acquire other businesses.  Loan proceeds can also be used to purchase or construct owner-occupied commercial buildings (51% occupied on existing; 60% occupied on new construction).  The 7(a) loan offers fully amortized loan terms up to 25 years, up to 90% financing and lesser prepayment penalties that offer more flexibility if your company is expanding.

Loan Structure

A common misconception with SBA 7(a) financing is the loan amount is funded by the federal government.  With the 7(a) loan all financing is funded by the individual Lender.  The Lender then receives a 75% government guarantee from the US Small Business Administration.  Loans are priced and approved at the bank level, then the government is notified of the commitment.  Loan terms include:

Loan Size

Up to $2 Million

Advance Rates

• Real estate - up to 90% (less for special-use properties)
• Business acquisition - up to 80%
• Equipment acquisition - up to 100%
• Business start-up - up to 70%

Maximum Term (Fully Amortized)

• Real estate purchase and refinance - 25 years
• Business or equipment acquisition - 10 years
• Working capital and inventory - 10 years

Collateral

Business assets, business or personal real estate

Member FDIC | Equal Housing Lender