What Is the SBA 7(a) Loan Maximum Amount?
The maximum amount for an SBA 7(a) loan is $5 million, but other programs have different maximum amounts. Here’s a breakdown of maximum SBA loan amounts.
Understanding the SBA 7(a) Loan Fees: Both for Borrowers and Lenders
For loans with terms of over 15 years, prepayment penalties are imposed by the SBA. The penalty only applies to the first three years, starting at 5% of the outstanding balance. Each year the penalty declines; so in the second year, the prepayment penalty is 3%; and in the third year, it reduces to
What Is the Maturity of the SBA 7(a) Loan?
Maturity is the total length of payments a borrower will make to a lender. The term lasts until the date of the final payment, and payments are broken down based on the length of the loan.
What is the LTC Ratio for the SBA 7(a) Loan?
If your business plans include taking out a commercial real estate construction loan , you’ll want to familiarize yourself with the Loan to Cost (LTC) ratio and how it impacts your financing.
What Are Liabilities in the SBA 7(a) Program?
A business’s financial obligations—like SBA 7(a) loan payments, salaries, mortgages, and deferred payments—are considered liabilities. Liabilities are deducted from a business’s total equity. A business will settle liabilities over time by paying them off, or by trading goods or services.
What Are Fixed Assets in the SBA 7(a) Program?
The SBA talks about fixed assets as tangible and long term, meaning they can’t be converted into cash easily. Things like real estate and land, certain equipment, and other specialized property are considered fixed assets.
Do SBA 7(a) Loans Require Collateral?
The SBA 7(a) loan programs don't require collateral, but individual banks may have their own requirements. Buildings, equipment, and land are all possible types of collateral that you can offer.
SBA 7(a) Fact Sheet: Loan Terms, Fees, and More
Get the essential details on the SBA 7(a) loan in our free fact sheet here. Download now to see the latest rates, maturity, fees, amounts, and other important information about the Small Business Administration's main loan program for entrepreneurs and business owners.
How Long Does it Take to Approve an SBA 7(a) Loan?
SBA 7(a) approval time varies, depending on the lender’s experience level. Preferred lenders offer fastest closings, followed by certified lenders and standard lenders. All will guarantee your small business loan under SBA rules.
Does the SBA 7(a) Loan Program Have Borrower Equity Requirements?
Yes. Borrowers are expected to inject their own money into their business, and this monetary injection is what’s referred to as borrower equity or collateral . Your lending institution may require you pledge a second mortgage on your home or other collateral.
Understanding How the SBA Guarantees Loans
The SBA doesn’t lend money directly, but guarantees a portion of loans made by third-party lenders. The amount the SBA will back is based on the amount of the loan. Here’s a breakdown of how the guarantee works for the SBA 7(a) loan program.