SBA 7a

         What is the SBA 7(a) Program?

The 7(a) Loan Program is SBA’s primary program for helping small businesses with financing guaranteed for a variety of general business purposes.

USES OF PROCEEDS·         
Equipment purchases (machinery, business vehicles)
Permanent working capital
Inventory
Business expansion
Business purchase/acquisition 
Real estate purchase      
Land acquisition and real estate construction·        
Real estate improvements·        
Refinance of existing business debt·         
Startup costs (case-by-case basis) 

AMOUNTS·        
Minimum- $10,000     
Maximum – $5 Million 

MATURITY·        
Inventory or working capital- Typically structured at 7 years but not to exceed a maximum of 10 years     

Equipment, fixtures, or furniture- Typically structured at 7 years but not to exceed a maximum of 10 years, it may not exceed the economic useful life.·        

Real Estate, including acquisition, rehabilitation, renovation, or construction- Up to 25 years plus any interest period to reasonably complete the construction or improvements·        

7(a) Refinancing- Must coincide with the remaining useful life of the assets being refinanced or use of proceeds chart

INTEREST RATE/OTHER TERMS
Variable Rates – based on Prime Rate based on dollar amount of loan, term and collateral.

Fully-Amortized over life of loan (No Balloon Payments)  

Pre-Payment Penalty- under 15 years None
Over 15 years (1st 3 years)- 5,3,1

SBA Guaranty Fee

$150,000 or less: 2% of the guaranteed portion. 
For loans of $150,001 to $700,000: 3% of the guaranteed portion.
For loans of $700,001 to $5,000,000: 3.5% of the guaranteed portion of the loan up to
and including $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.

Lender may charge up to $2500 packaging fee. 

WHO QUALIFIES·           
Must be for profit and meet size standards

Good Character and credit management

Must be an eligible type of business 

BENEFITS FOR BORROWERS·          
Long term financing           
Improved Cash flow          
Fixed Maturity  
No balloon payments
No prepayment penalty under 15 years   

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Jake is NOT a loan broker but works for a direct lender!