Who Are Specialized Lenders in the SBA 7(a) Loan Program?
In terms of SBA lending, a specialized lender is a bank or other financial institution that meets the SBA's criteria for offering SBA loan products.Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by an SBA LenderClick Here to Get Quotes!
In terms of SBA lending, a specialized lender is a bank or other financial institution that meets the SBA's criteria for offering SBA loan products.
Traditional loans aren’t right for everybody, especially small business entrepreneurs who are planning on repaying the capital of their loan with income made through their new business. This is where specialized lenders can fill in the gaps, offering flexible funding solutions that make a loan more possible. The SBA is just one example of a specialized lender.
To learn more about the SBA 7(a) loan program or to get a free quote, simply click fill out the form below!
What is the SBA 7(a) loan program?
The SBA 7(a) loan program is a federal government guarantee of a small business loan. Although the loan itself comes from a private lender, owners who qualify for SBA 7(a) loans have a significant portion backed by the government, making it much easier for businesses with less access to capital or problems with credit to receive financing.
Loans of up to $5 million qualify under SBA 7(a), with the SBA providing a guarantee of up to $3.75 million, or 75%. For loans worth less than $150,000, the government will back up to 85% of the debt. To qualify under this program, borrowers must meet SBA standards of being a small business, not have defaulted on previous government loans, and demonstrate the ability to repay the loan.
While there is a prepayment penalty on loans that mature beyond 15 years, there's no prepayment penalty for shorter-term loans. SBA 7(a) doesn't have a balloon payment, and provides improved cash flow for the business. SBA 7(a)-backed loans can be used for various business purposes, including renovations, capital purchase, seasonal lines of credit, or refinancing of existing debt.
What are the eligibility requirements for the SBA 7(a) loan program?
The SBA 7(a) loan program has the following eligibility requirements:
- 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.
What are the benefits of the SBA 7(a) loan program?
The SBA 7(a) loan program offers several benefits, including flexible terms, competitive interest rates, and loan amounts up to $5 million. The flexible terms allow borrowers to tailor their loan to fit their specific needs, while the competitive interest rates are typically lower than those offered by traditional lenders, such as banks. Additionally, the loan amounts can range from $5,000 to $5 million, and terms can be up to 25 years.
What types of businesses are eligible for the SBA 7(a) loan program?
The SBA 7(a) loan program is available to businesses with fewer than 500 employees. Eligible businesses include those in the business services and office-based companies sector. This includes businesses that need funding for day-to-day operational costs, expansion, inventory needs, and even refinancing debt. The SBA also focuses on boosting female business owners, since the lack of financing for female entrepreneurs has been identified as a huge problem.
Eligible business types for SBA 7(a) loans include:
- Hotels and Motels
For more information on the SBA 7(a) loan program, please visit www.sba7a.loans.
What are the different types of lenders in the SBA 7(a) loan program?
The SBA 7(a) loan program is offered through traditional lending institutions, such as banks, credit unions, and other financial institutions. The SBA also works with non-traditional lenders, such as online lenders, to provide 7(a) loans. The SBA also works with Certified Development Companies (CDC) to provide loans through the SBA 504 loan program.
For more information on the different types of lenders in the SBA 7(a) loan program, please visit the SBA website.