Get an SBA 7(a) Loan for Your Small Business
If you’re looking for small business financing, and you’ve exhausted all the conventional options, the SBA 7(a) loan could be a great way to fund your business. Right now, the SBA 7(a) loan is the most popular loan guaranteed by the U.S. Small Business Administration (SBA), with $25.8 billion of loans approved in 2017 alone. Here are a few facts about SBA 7(a) Loans:
Loan Size: Can provide up to $5 million of capital for small businesses
Loan Term: Have loan terms of up to 10 years for working capital and 25 years for real estate
Interest Rates: Most loans currently have interest rates between 7.25% and 9.75%, depending on loan size and maturity
Loan Use: Can be used for working capital, equipment, buying a business or franchise, refinancing debt, and purchasing real estate
Credit Requirement: Typically require a credit score of around 680
Down Payments: Usually require a 10% to 20% down payment, as well as a certain amount of collateral
Timing: SBA 7(a) loans can be approved in between 1-10 days, depending on the lender
Try Our SBA 7(a) Loan Calculator
our easy-to-use sba 7(a) loan calculator can help you know what to expect in terms of interest rates and monthly payments.
SBA 7(a) Loan Terms and Requirements
SBA 7(a) loans offer flexible loan amounts, maturity, and rates to fit every situation. Whether you need a small working capital loan or a million-dollar note to build a facility, the SBA can help. However, in order to qualify for an SBA loan like the SBA 7(a) loan, your business will have to meet certain requirements:
Must not be over the SBA size limit for your particular industry
Must not be able to get a comparable loan from a bank on reasonable terms
Must not be involved in lending, rental real estate, investing, or speculation
Must operate as a for-profit business; no non-profits allowed
While we mentioned above that interest rates usually vary from 7.25% to 9.75%, right now, average SBA 7(a) loan rates are:
Less than $25,000: 9.25% to 9.75%
Between $25,000 and $50,000: 8.25% to 8.75%
Over $50,000: 7.25% to 7.75%
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Uses for the SBA 7(a) Loan
SBA loans help small business owners get business mortgages for commercial real estate, working capital loans, equipment loans, and much more. Get fast access to capital, amounts up to $5 million, and leverage 85% of the cost of new construction or business-owned commercial real estate.
Do I Qualify?
Qualification for an SBA loan isn't complicated -- but there are some restrictions based on industry and credit history. Find out if you're eligible for an SBA loan and prepare your business for the best chance of approval by reading up on what it takes to qualify for an SBA 7(a) loan.
Finding a Lender
SBA lenders exist in most U.S. cities. Banks, credit unions, savings & loans companies, and specialized lenders can all operate as SBA 7(a) loan lenders. Like any important decision about your business, it’s smart to shop around for a lender.
Commercial Real Estate Loans
Get the financing you need for commercial real estate through the SBA. Learn about the SBA 7(a) loan for different property types, including owner-occupied real estate, land, and business rental properties.
SBA Loan Glossary and FAQs
Baffled by SBA terminology? Get answers to your specific SBA loan questions in our massive SBA 7(a) loans glossary and FAQs database.
Other SBA Loan Types
While the 7(a) loan program may be the SBA’s flagship financial product, it’s far from the only loan they guarantee. And, at SBA7a.Loans, we want you to get the perfect financing solution for your business, even if isn’t an SBA 7(a) loan (or an SBA loan at all.)
Some of the most popular, non-7(a) SBA loans include:
SBA 504 Loans: Designed specifically for purchasing land, existing buildings, machinery, and other fixed assets, SBA 504 loans have lower interest rates than SBA 7(a) loans and can be issued in amounts up to $5.5 million in some circumstances. SBA 504 loans, however, cannot be used for working capital.
SBA Disaster Loans: These loans are designed to help businesses recover in the face of natural disasters. Unlike other SBA loans, SBA Disaster Loans are provided directly through the SBA, not simply guaranteed by them. SBA Disaster Loans come in a few major varieties, including:
Business physical disaster loans: With loan amounts up to $2 million, these loans are designed to help business owners repair buildings, equipment, and other tangible assets. These loans are available to businesses of any size and many non-profits.
Business economic injury disaster loans (EIDL): Also available in amounts up to $2 million, these loans provide working capital for small businesses, certain co-ops, and some non-profits.
Home and personal property disaster loans: After a disaster, home owners or condominium owners can borrow funds from the SBA in order to help repair or replace their primary home and personal property. Primary home repair/replacement loans are available in amounts up to $200,000, while personal property repair/replacement loans are available in amounts up to $40,000.
Debt service coverage ratio, or DSCR, is one of the most important factors lenders look at when approving a loan. DSCR is calculated by dividing a business’s net operating income by their total debt service. For SBA 7(a) financing, most lenders want a borrower to have a DSCR of 1.25x or more.