SBA 7A

Transaction Size: There is no maximum project size. The SBA guarantees loans up to $5,000,000 with a maximum guaranteed loan amount of $3,750,000. There is no theoretical minimum, however, most lenders are reluctant to process commercial loans less than $50,000.

Processing Time: The loan processing time can vary.

The SBA 7(a) loan program is authorized by section 7(a) of the Small Business Act, which allows the Small Business Administration to approve and guarantee business loans to small businesses. It is most common loan for small businesses. The SBA does not loan money directly to small business owners and does not fully guaranty the loan; it is a shared risk. Furthermore, the SBA guaranty only payment default. The bank therefore has to thoroughly review the loan because the SBA guaranty does not protect against loses due to borrower’s misrepresentation, the banks failure to follow standard underwriting protocol, or lack of due diligence on the part of the lender.

Banking institutions and some non-bank lenders that participate with SBA in the 7(a) program are the only ones that provide 7(a) loans; they are called Participants. The lenders structure and manage the loan using SBA’s requirements.

The following eligibility requirements must be meet in order to obtain a 7(a) loan:

• Repayment ability via cash flow from the business
• Good character and management capability
• Collateral
• Owners equity contribution
• All owners with a 20 percent or greater equity stake in the franchise business must personally guarantee the loan

Being well versed in SBA requirements and the underwriting process, we guide businesses through every stage of the process starting with the application straight through to funding.

Source: U.S. Small Business Administration