Flexible term lending for small-business owners
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SBA 7(a) Loan Program
Eligibility
- Business must be operated for profit.
- Business must be open to all on a nondiscriminatory basis.
- Business must be located in the United States or its possessions.
- Owners must be U.S. citizens or resident aliens.
- Business owner must be able to demonstrate repayment ability from earnings.
- Business must not be involved in investment real estate, religion, politics, or sex.
Loan Terms
- Loans range in size from $50,000 to $5 million.
- Loan terms range from 7 years to 25 years, based on the use of proceeds.
- Owner-occupied real estate—25 years
- Machinery and equipment—10-15 years
- Business acquisitions—10 years
- Working capital—7 years
- Loans are structured without balloon payments.
- Interest rates are floating, up to 2.75 percent over prime.
- Personal guarantees are required from any owners of 20 percent or more of the business.
- Collateral includes all business assets and may also include personal assets.
Use of Proceeds
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Expand or acquire a business, or franchise. Acquire 100 percent of anexisting business, or pay fees to start a franchise.
- Finance business expenses (working capital). Pay salaries and vendors, purchase inventory, advertise, finance receivables, pay bookkeeping and legal fees, or rent office space.
- Purchase office or other equipment. Purchase computers, furniture, fixtures, manufacturing equipment, and heavy machinery.
- Purchase or improve owner-occupied real estate. Purchase or construct buildings, make leasehold improvements, expand or renovate facilities, or purchase land. If purchasing, owner must occupy at least 51 percent of the real estate; if constructing, owner must occupy at least 67 percent.
- Refinance existing business debt. Improve cash flow by reducing monthly loan payments by at least 20 percent.
