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.Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get Quotes
Maturity is the total length a borrower will make payments to a lender. Maturity, along with the total amount of the loan, determines how much your payments will be. A loan with a long term will generally have lower payments than a loan with a short term, and a longer loan will also include more interest payments.
The SBA 7(a) is a fixed rate loan, which means your payments will be the same amount throughout the maturity of your loan. If you want to know more about your loan’s potential amortization schedule, head over to our loan calculator for a full breakdown.
SBA 7(a) Length and Terms
For the SBA 7(a) loan program, maturity is typically standardized based on the type of the loan and the amount awarded. Real estate and land loans have a maturity of up to 25 years, and equipment and working capital loans have a maturity of up to 10 years. These terms go hand in hand with the other straightforward SBA 7(a) loan terms.
Borrower’s enjoy no minimum loan amount under the SBA 7(a) loan, while the maximum is set at $5 million. The SBA guarantees loans up to $150,000 for up to 85%, and on loans greater than $150,000, the SBA guarantees up to 75%. This encourages lenders to approve loans to eligible borrowers, and enables borrowers to really go for the amounts they need.
To learn more about the SBA 7(a) loan program or to get a free quote, simply click the button below!
What is the maximum loan term for an SBA 7(a) loan?
The maximum loan term for an SBA 7(a) loan depends on the type of loan. For commercial real estate loans, the maximum loan term is 25 years. For equipment loans, the maximum loan term is 10 years. For working capital loans, the maximum loan term is also 10 years.
What are the repayment terms for an SBA 7(a) loan?
The repayment terms for an SBA 7(a) loan vary depending on the type of loan. For commercial real estate loans, the loan term is up to 25 years. For equipment loans, the loan term is up to 10 years. For working capital loans, the loan term is also up to 10 years. The maximum interest rate is between 7.25% and 9.75%.
Learn more: Understanding How the SBA Guarantees Loans
What are the interest rates for an SBA 7(a) loan?
The interest rates for an SBA 7(a) loan depend on the amount of the loan and the maturity of the loan. For loans with a maturity of less than 7 years, the interest rate is the prime rate plus 4.25% for loans of $25,000 or less, 3.25% for loans between $25,001 and $50,000, and 2.25% for loans of $50,001 and up. For loans with a maturity of more than 7 years, the interest rate is the prime rate plus 4.75% for loans of $25,000 or less, 3.75% for loans between $25,001 and $50,000, and 2.75% for loans of $50,001 and up. The current prime rate is 7.75% as of February 2023.
What are the fees associated with an SBA 7(a) loan?
The SBA 7(a) loan fees vary depending on the exact size of the loan. From $150,000 to $700,000, the fee is 3%. From $700,000 to $1 million, the fee is 3.5%. From $1 million to $5 million, the fee is 3.5%, plus an additional 0.25% for the amount over $1 million. Borrowers are also required to pay an annual service fee of 0.52% of the loan amount. Additionally, if you make an early payment on an SBA 7(a) loan within the first three years, you will be subject to a prepayment penalty. In the first year, the penalty is set at 5%. In the second year, it's set at 3%, and in the third year, the prepayment penalty declines to 1%.
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What are the eligibility requirements for an SBA 7(a) loan?
The eligibility requirements for an SBA 7(a) loan include:
- The business must meet the SBA's size standards for its particular industry.
- The business must have fewer than 500 employees and less than $7.5 million in revenue each year for the previous three years.
- The business must physically be based in the U.S. and operate within the U.S. and its territories.
- The business must operate for profit.
- Business owners must first have used other sources of financing, including personal funds, in order to qualify.
- Businesses must not be involved in lending, real estate, or speculation.
- Your business must operate for profit. Nonprofits and not-for-profit businesses are not eligible.
- You must also have some equity in the business — this could mean you already have a profitable business, or you could use your own personal equity as collateral.
- If you have any alternative financial resources, you must have used them first. For example, if you have a personal savings account or are able to get a personal loan, then you must first pursue those options before applying for an SBA 7(a) loan.
- The business owner cannot be on parole.
- You must be doing business in the U.S. or its territories.