SBA 7(a) Loans

If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.

The following Loan Information is general information on the SBA 7(a) Loan Program and is not all inclusive.

To inquire about an SBA 7(a) Loan please use our Quick App or download our Commercial Loan Package.

Loan Purpose Commercial real estate purchase, refinance, and construction, including working capital and other business assets.

Loan Amount $250,000 to $5,000,000.

Time to Close Closing within 45–60 days of signed commitment letter.

Loan To Value Up to 125% (up to 125% on general purpose real estate and up to 130% for medical office condominiums or office buildings.)

Interest Rate Competitive rates.

Term Up to 25 years based on the loan purpose. No balloons or calls—fully amortizing over the life of the loan.

Prepayment Penalty Declining penalty over 3 years (5%, 3%, 1%).

Fees 1% to 2% origination fee based on loan size One-time SBA loan guarantee fee based on loan size Processing fee based on loan size – generally $500 – $1500 Good faith deposit to be used for loan closing costs and third party reports

Collateral First lien on assets being financed UCC lien may be required on ff&e

Recourse Personal guarantees for all individuals owning 20% or more. Corporate guarantees of affiliated companies may be required.

Debt Service Requirements Projected debt service coverage of 1.25:1 times.

Industries All-for profit businesses that meet SBA eligibility requirements.

Eligibility All 7(a) loan applicants must meet the program’s eligibility requirements, which are designed to be as broad as possible.

Please see below for information on how a SBA 7(a) loan may be used.

If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.

Eligible Use of 7(a) Loan Proceeds Include (Non-Exclusive):

• The purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities
• The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
• Long-term working capital, including the payment of accounts payable and/or the purchase of inventory
• Short-term working capital needs, including seasonal financing, contract performance, construction financing and export production
• Financing against existing inventory and receivable under special conditions
• The refinancing of existing business indebtedness that is not already structured with reasonable terms and conditions
• To purchase an existing business

SBA loans cannot be used for these purposes:

• To refinance existing debt where the lender is in a position to sustain a loss and SBA would take over that loss through refinancing
• To effect a partial change of business ownership or a change that will not benefit the business
• To permit the reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business’s continuance until the loan supported by SBA is disbursed
• To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow
• For a non-sound business purpose

If you are unsure whether or not your anticipated use of funds is allowed, check with an Alliance Representative.

All above information obtained from www.sba.gov

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