SBA’s 7(a) Loans

What is a 7(a) loan?

The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:

Short- and long-term working capital
Refinance current business debt
Purchase furniture, fixtures, and supplies

The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.

Am I eligible?

To be eligible 7(a) loan assistance, businesses must:

Operate for profit
Be considered a small business, as defined by the SBA
Be engaged in, or propose to do business in, the United States or its possessions
Have reasonable invested equity
Use alternative financial resources, including personal assets, before seeking financial assistance
Be able to demonstrate a need for a loan
Use the funds for a sound business purpose
Not be delinquent on any existing debt obligations to the U.S. government

Some businesses may not qualify for a 7(a) loan. Read more about what the SBA considers an ineligible business.

What do I need to apply?

Basic uses for the 7(a) loan include:

Long- and short-term working capital
Revolving funds based on the value of existing inventory and receivables
The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
The purchase of real estate, including land and buildings
The construction a new building or renovation an existing building
Establishing a new business or assisting in the acquisition, operation or expansion of an existing business
Refinancing existing business debt, under certain conditions

How do I pay back my 7(a) loan?

Loan repayment terms vary according to several factors:

Repayment terms	Most 7(a) term loans are repaid with monthly payments of principal and interest. Payments stay the same for fixed-rate loans because the interest rate is constant For variable rate loans, the lender can require a different payment amount when the interest rate changes
Interest rates	3 Acceptable Base Rates: Prime rate published in a daily national newspaper London Interbank One Month Prime plus 3% SBA Peg Rate Maximum Allowable Spread: Maturity < 7 years = 2.25% Maturity > 7 years = 2.75%
Percent of Guaranty	SBA can guarantee up to: 85% of a loan up to $150,000 75% of a loan greater than $150,000

Existing borrowers

Existing borrowers can create an account in the SBA Capital Access Financial System (or CAFS) to monitor their loan status. Get account enrollment instructions.

*Source: https://www.sba.gov/funding-programs/loans/7a-loans