The SBA 7(a) loan program is the Small Business Administration’s primary, most flexible program for providing financial assistance to small businesses. It guarantees loans up to $5 million for purposes like working capital, equipment, and real estate when conventional financing is not available. The SBA guarantees a portion of the loan made by lenders, reducing lender risk, hence making the approval process more flexible than conventional lending.
Funds can be used for expansion, buying land or buildings, purchasing equipment, buying inventory, or refinancing existing debt, and/or acquiring and starting businesses.
Up to $5 million maximum for standard loans (higher for manufacturers). Collateral is typically scrutinized and blended with earnings based on Business Type/NAICS codes.
SBA Small’ is a credit and earnings program that offers up to $350,000 in financing with expedited approval (within 36 hours). It features streamlined paperwork, allowing lenders to use their own forms and processes, and covers purposes like working capital, equipment, or expansion. The SBA guarantees from 75%-85% of the loan (depending on the amount), while borrowers negotiate terms directly with lenders, with repayment up to 10 years (or 7 for revolving lines of credit).
Maximum of $350,000 for various business needs, including inventory, equipment, or expansion.
The SBA provides a response within 36 hours of the lender's request with requisite document submission. However, final funding from the lender may take 21 to 45 days based specific financial, insurance and tax clearance documentation.
Negotiated between the borrower and lender, often based on the WSJ Prime Rate plus a margin (e.g., Prime + 4.5% to 6.5%).
Lenders are not required to take collateral for loans up to $50,000 and each Lender has their own regulations relating to subordinating to other UCC filings on respective firms balance sheet.
