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SBA 7(a) Loan Program
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SBA 7(a) loan program can provide funds for a variety of needs such as working capital,
business expansion, inventory and owner-occupied real estate. The flexibility of the SBA
7(a) loan allows you to conserve working capital. Less cash is needed at closing with
down payments often as low as 10 percent; and cash flow can be optimized, because
longer repayment terms help reduce your payments.
Loan Purpose
SBA 7(a) loans can be used to purchase commercial real estate, machinery and
equipment, fixtures and furniture, inventory and other business assets; to provide working
capital; and to pay loan closing costs. SBA 7(a) loans can also be used to refinance
certain loans.
Loan Amount
Loans range from $250,000 to $2,000,000.
Time to Close
Commitment Letter within 3 days of completed application! Closing within 30 – 45 days
of signed commitment letter.
Loan To Value
Up to 90%.
Interest Rate
Floating rates, up to 2.75% over the Wall Street Journal Prime rate, adjusting monthly.
Term
Up to 25 years, fully amortizing over the life of the loan.
The term offered is based upon the use of loan proceeds.
Terms for assets categories are as follows:
- Real estate – up to 25 years.
- Working capital – 7 to 10 years.
- Machinery and Equipment – based on the useful life of the asset.
Prepayment Penalty
Prepayment penalties will apply.
Fees
A one time SBA guarantee fee based on the dollar amount being guaranteed.
Customary closing costs.
Good faith deposit to be used for loan closing costs.
Collateral
Loans must be fully secured by commercial real estate or a combination of commercial
real estate, residential real estate, machinery and equipment, and fixtures and furniture.
Recourse
All principals who own 20% or more of the business are required to provide a full
guarantee. Principals or key managers owning less than 20% may be required to provide
a guarantee on a case-by-case basis.
The guarantee of affiliated companies may be required based on the percentage of
ownership of the affiliate and the borrower's relationship with the affiliate.
Debt Service Requirements
A minimum projected debt service coverage ratio of 1.25 times is required.
Industries
Loans can be made to all businesses except those that do not meet SBA 7(a) eligibility
requirements. These are primarily firms involved in real estate investment/speculation,
gambling, adult entertainment, lending money and pyramid sales schemes. Firms
involved in nuclear waste, utilities, natural resource development, fishing vessels,
biotechnology and internet technology are also excluded from eligibility.
Other Considerations
Appraisal and Environmental reports will be required for real estate used as collateral.
Borrowers cannot have filed for bankruptcy within the last three years.
Life insurance on the principals of the company may be required.
business expansion, inventory and owner-occupied real estate. The flexibility of the SBA
7(a) loan allows you to conserve working capital. Less cash is needed at closing with
down payments often as low as 10 percent; and cash flow can be optimized, because
longer repayment terms help reduce your payments.
Loan Purpose
SBA 7(a) loans can be used to purchase commercial real estate, machinery and
equipment, fixtures and furniture, inventory and other business assets; to provide working
capital; and to pay loan closing costs. SBA 7(a) loans can also be used to refinance
certain loans.
Loan Amount
Loans range from $250,000 to $2,000,000.
Time to Close
Commitment Letter within 3 days of completed application! Closing within 30 – 45 days
of signed commitment letter.
Loan To Value
Up to 90%.
Interest Rate
Floating rates, up to 2.75% over the Wall Street Journal Prime rate, adjusting monthly.
Term
Up to 25 years, fully amortizing over the life of the loan.
The term offered is based upon the use of loan proceeds.
Terms for assets categories are as follows:
- Real estate – up to 25 years.
- Working capital – 7 to 10 years.
- Machinery and Equipment – based on the useful life of the asset.
Prepayment Penalty
Prepayment penalties will apply.
Fees
A one time SBA guarantee fee based on the dollar amount being guaranteed.
Customary closing costs.
Good faith deposit to be used for loan closing costs.
Collateral
Loans must be fully secured by commercial real estate or a combination of commercial
real estate, residential real estate, machinery and equipment, and fixtures and furniture.
Recourse
All principals who own 20% or more of the business are required to provide a full
guarantee. Principals or key managers owning less than 20% may be required to provide
a guarantee on a case-by-case basis.
The guarantee of affiliated companies may be required based on the percentage of
ownership of the affiliate and the borrower's relationship with the affiliate.
Debt Service Requirements
A minimum projected debt service coverage ratio of 1.25 times is required.
Industries
Loans can be made to all businesses except those that do not meet SBA 7(a) eligibility
requirements. These are primarily firms involved in real estate investment/speculation,
gambling, adult entertainment, lending money and pyramid sales schemes. Firms
involved in nuclear waste, utilities, natural resource development, fishing vessels,
biotechnology and internet technology are also excluded from eligibility.
Other Considerations
Appraisal and Environmental reports will be required for real estate used as collateral.
Borrowers cannot have filed for bankruptcy within the last three years.
Life insurance on the principals of the company may be required.
| Small Business Administration (SBA) Loan |
