The 7(a) loan is the SBA’s most popular program because of its flexibility. Whether you need funds for working capital, real estate, equipment, or starting a business, this loan can help.
How it works:
You can borrow up to $5 million. While the funds come from your bank, the SBA guarantees up to 85% of the loan, making it less risky for the lender to approve you.
Eligibility
While every business is reviewed individually, most applicants must meet these basic requirements:
- Operate for profit
- Meet the SBA’s definition of a “small” business
- Have reasonable equity invested
- Have tried other financing options (like personal assets) first
- Demonstrate a clear need for the funds
What can you use the loan for?
Common uses for the 7(a) loan include:
- Buying, refinancing, or improving real estate
- Refinancing existing business debt
- Buying machinery, equipment, or furniture
- Buying a business (partial or complete ownership changes)
- Short- and long-term working capital
What you can’t use it for:
- Repaying unpaid taxes
- Refinancing debt that would shift risk to the SBA
- Investing in religious or political businesses
- Lending money (e.g., pawn shops)
Note: If you have a criminal history or a record of defaulting on debts, you are likely ineligible.
The Application Process
Be prepared for paperwork. While the SBA is speeding things up, the process takes time.
Steps to prepare:
- Review the SBA checklist: Gather all required documents.
- Complete required forms: You will need to provide personal background details and financial statements.
- Work with your lender: We recommend filling out financial forms with your bank manager or accountant to avoid errors.
Repayment Terms
You will make monthly payments on principal and interest. Maximum loan terms depend on how you use the money:
- Real Estate: Up to 25 years
- Equipment: Up to 10 years
- Working Capital: Up to 7 years
Collateral: The SBA expects loans to be secured, but they may not reject you solely for lacking collateral if the rest of your application is strong.
Next Steps
If you need financing to start or grow your business, the 7(a) loan is a great option. Contact us at TripleCapital Commercial Finance Group to determine your eligibility and get help with the application process.