7a commercial loans

Types of 7(a) loans

The 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses. The terms and conditions, like the guaranty percentage and loan amount, may vary by the type of loan.

Standard 7(a)

Maximum loan amount
$5 million
Maximum SBA guarantee %
85% for loans up to $150,000 and 75% for loans greater than $150,000
Interest rate
Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum
Eligibility decision
By the SBA. Qualified lenders may be granted delegated authority (PLP) to make eligibility determinations without SBA review.
Revolving lines of credit
Up to 10 years (Permitted only under CAPLines submission. See below)
SBA turnaround time
5-10 business days
Forms
SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required)
Collateral
Lenders are not required to take collateral for loans up to $25,000. For loans in excess of $350,000, the SBA requires that the lender collateralize the loan to the maximum extent possible up to the loan amount. If business fixed assets do not “fully secure” the loan the lender may include trading assets (using 10% of current book value for the calculation), and must take available equity in the personal real estate (residential and investment) of the principals as collateral.
Credit decision
By the SBA. Qualified lenders may be granted delegated authority (PLP) to make credit decisions without SBA review.

 

7(a) Small Loan

Maximum loan amount

$350,000

Maximum SBA guarantee %

85% for loans up to $150,000 and 75% for loans greater than $150,000

Interest rate

Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility decision

By the SBA. Qualified lenders may be granted delegated authority (PLP) to make eligibility determinations without SBA review.

SBA turnaround time
5-10 business days

Forms

SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required)

Collateral

Lenders are not required to take collateral for loans up to $25,000. For loans over $25,000, up to and including $350,000, the lender must follow the collateral policies and procedures that it has established and implemented for its similarly-sized non-SBA-guaranteed commercial loans, but at a minimum the lender must take a first lien on assets financed with loan proceeds and lender must take a lien on all of the applicant’s fixed assets including real estate. Lender is not required to take a lien against applicant’s real estate when the equity is less than 25% of the fair market value. The lender may limit the lien taken against real estate to the loan amount.

Credit decision

By the SBA. Qualified lenders may be granted delegated authority (PLP) to make credit decisions without SBA review.

SBA Express

The SBA Express program features an accelerated turnaround time for SBA review. The SBA will respond to your application within 36 hours.

Maximum loan amount

$350,000

Maximum SBA guarantee %

50%

Interest rate

Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility decision

Made by the lender

Revolving lines of credit

Up to seven years with maturity extensions permitted at the outset

SBA turnaround time

Within 36 hours

Forms

Lender primarily uses own forms and procedures, plus SBA Form 1919

Collateral

Lenders are not required to take collateral for loans up to $25,000. May use their existing collateral policy for loans over $25,000 up to $350,000.

Credit decision

Made by the lender

Purchase

Lender may request expedited SBA purchase on small loans or in situations where liquidation may be delayed

 

Export Express

The Export Express program provides exporters and lenders a streamlined method to obtain SBA-backed financing for loans and lines of credit up to $500,000. Lenders use their own credit decision process and loan documentation. The SBA will respond to your application within 24 hours.

Maximum loan amount

$500,000

Maximum SBA guarantee %

90% for loans of $350,000 or less, 75% for loans more than $350,000

Interest

Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility decision

Made by the lender

Revolving lines of credit

May not exceed seven years

SBA response time

24 hours

Forms

Lender primarily uses own forms and procedures, plus SBA Form 1919, Borrower Information

Collateral

Lenders follow collateral policies and procedures that the lender has established for its non-SBA-guaranteed loans

Credit decision

Made by the lender

SBA Senior International Credit Officers can provide in-house training to help lenders become proficient in the Export Express program. For more information on this training or for application assistance, contact your local U.S. Export Assistance Center.

Export Working Capital

Export Working Capital loans are for businesses that can generate export sales and need additional working capital to support these sales. Lenders review and approve applications and submit the request to the U.S. Export Assistance Center location servicing the exporter’s region.

Maximum loan amount

$5 million

Maximum SBA guarantee %

90%

Interest

Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility decision

By the SBA. Qualified lenders may be granted authorization to make eligibility decisions.

Revolving lines of credit

Terms of 12 months or less

SBA turnaround time

5-10 business days

Forms

SBA-EIB 84-1, plus attachments

Collateral

Export-related inventory and receivable generated by export sales financed with EWCP funds. The SBA also requires personal guarantee of owners with 20% or more ownership.

Credit decision

Made by the SBA

International Trade

International Trade loans provide long-term financing to businesses that are expanding because of growing export sales, or that have been adversely affected by imports and need to modernize to meet foreign competition.

Businesses can use International Trade loans for fixed assets for construction, building, real estate equipment, and for working capital for export transactions.

Maximum loan amount
$5 million
Maximum SBA guarantee %
90%
Interest rate
Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum
Eligibility decision
Made by the SBA
Loan maturity
10 years for permanent working capital, up to 10 years for machinery and equipment or the useful life of the equipment (not to exceed 15 years), and up to 25 years for real estate.
SBA turnaround time
5-10 business days
Credit decision
Made by the SBA

 

Preferred Lenders

Under the Preferred Lenders program, the SBA gives select lenders more authority to process, close, service, and liquidate SBA-guaranteed loans. An SBA field office serving the area in which a lender’s office is located can nominate the lender, or the lender can ask a field office to consider it for preferred status.

In making its decision, the SBA considers whether the lender:

  • Has the ability to process, close, service and liquidate loans
  • Has the ability to develop and analyze complete loan packages
  • Has satisfactory SBA performance

Veterans Advantage

Veteran-owned businesses are one of the fastest-growing and significant segments of the U.S. economy. SBA loans made to veteran-owned small businesses come with reduced fees

To be eligible to receive fee relief through the Veterans Advantage program, a small business must be at least 51 percent owned and controlled by someone in one of the following groups:

  • Honorably discharged veterans
  • Active Duty Military service member eligible for the military’s Transition Assistance Program (TAP)
  • Service-disabled veterans
  • Reservists and/or active National Guard members
  • Current spouse of any veteran, active duty service member, Reservist, National Guard member, or the widowed spouse of a service member who died while in service or as a result of a service-connected disability

CAPLines

CAPLines is an umbrella program that helps small businesses meet their short-term and cyclical working-capital needs. It features four lines.

  • Seasonal CAPLine: Borrowers must use the loan proceeds solely to finance the seasonal increases of accounts receivable and inventory — or in some cases associated increased labor costs. It can be revolving or non-revolving.

  • Contract CAPLine: This line finances the direct labor and material cost associated with performing assignable contracts. It can be revolving or non-revolving.

  • Builders CAPLine: This line can finance direct labor and material costs for a small general contractor or builder constructing or renovating commercial or residential buildings. The building project serves as the collateral, and loans can be revolving or non-revolving.

  • Working CAPline: This is an asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit. It provides financing for cyclical growth, recurring and/or short-term needs. Repayment comes from converting short-term assets into cash, which is remitted to the lender. Businesses continually draw from this line of credit, based on existing assets, and repay as their cash cycle dictates. This line generally is used by businesses that provide credit to other businesses. Because these loans require continual servicing and monitoring of collateral, additional fees may be charged by the lender.

With the exception of the Builders CAPLine, the maximum maturity on a CAPLine loan is 10 years. Builders CAPLine loans must not exceed five years.  Holders of at least 20 percent ownership in the applicant business are required to guarantee the loan.

Information provided by U.S. Small Business Administration and can be found at sba.gov

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