SBA 7a Loan Reference Guide
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The SBA 7(a) loan program serves as the primary means for the Small Business Administration to support both startups and existing businesses through various loan options, including special initiatives for veterans and exporters. Key qualifications include having a tangible net worth under $15 million and a two-year average net income under $5 million, with eligible uses for funds covering working capital, business acquisitions, and real estate. Various loan programs under the 7(a) umbrella offer different maximum amounts and guarantees, with benefits for both borrowers and lenders.
SBA 7a Loan Reference Guide
- 1. SBA 7a Loan Program A Quick Reference Guide SBA loan specialists helping you put your business in overdrive! The 7a program is the Small Business Administration’s main method to support startups, as well as to facilitate other capital needs for existing businesses. In addition to traditional 7a loans, the 7a umbrella of government guaranteed loans includes a host of other programs for veterans, exporting, working capital, and other special initiatives. QUALIFICATIONS q New or existing for-‐profit business q Owner occupied/business use q Tangible Net Worth not to exceed $15 million q Net Income ( 2 yr avg) not to exceed $5 million ELIGIBLE USE OF FUNDS q Working capital q Inventory and supplies q Traditional debt refinancing q Business acquisitions q Partner buyouts q Revolving lines of credit q Equipment q Real estate purchase, leasehold improvements INJECTION REQUIREMENTS FROM BORROWER q 10-‐30%, not to exceed 30%. Injection is determined by credit worthiness and lender’s policy PUBLIC POLICY GOALS *Aids in reducing job creation requirements/increasing funds q Rural development q Revitalizing economic development areas q Women, minority, or veteran owned (51%) q Expanding exports q Areas impacted by federal budget cutbacks q Sustainable building/energy reduction of 10% BENEFITS TO BORROWER q Max 30% injection (usually 10-‐20%) q Cap on interest rate q No balloon payment q Can roll in certain soft costs q 25 year term on real estate, 5-‐10 years all other q No prepayment penalty under 15 years BENEFITS TO LENDER q up to 85% SBA guarantee q 1st lien position q Can take additional collateral q Bank issues all proceeds q Available for sale on secondary market LOAN PROGRAMS AND MAXIMUMS q Basic 7a ~ $5,000,000 gross q 85% guaranty for loans $150,000 or less, 75% guaranty on loans over $150,000 with maximum guaranty of $3.75 million q SBA Express ~ $350,000 q Guaranty of 50% q Revolving credit and term loans q Faster process, streamlined q Patriot Express ~ $500,000 q 85% guaranty for loans $150,000 or less, 75% guaranty on loans over $150,000 with maximum guaranty of $3.75 million q Available for all active and retired military/reservists and their spouses/widows q International Trade ~ $5,000,000 q 90% guaranty: up to $4 million for working capital, $4.5 million all other q Maturity up to 25 years q Export Working Capital ~ $5,000,000 q 90% of guaranty up to $4.5 million q Maturity generally 1 year or less, can go up to 3 years q Export Express q 90% of guaranty for loans $350,000 or less, 75% guaranty for loans over $350k q Caplines ~ $5,000,000 q Includes working capital, contract/seasonal, and builders Caplines q 85% guaranty for loans $150,000 or less, 75% guaranty on loans over $150,000 with maximum guaranty of $3.75 million q Other loans include Small Loan Advantage, Small/Rural Lender Advantage, and Community Advantage *All express loans require an approved PLP lender. info@5thgearconsulting.com 210-‐679-‐4621 www.5thgearconsulting.com