The Small Business Administration (SBA) 7A loan is designed to finance an existing array of small business needs. The SBA is a U.S. government body, with the motive of providing support for small businesses and entrepreneurs. For each loan authorized, a government-backed guarantee offers serious credibility, since the lender knows that even if you default, the government will pay off most of the balance. The 7(a) Loan Program is SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes.For many small businesses, it is beneficial because this is money and capital that may not be accessible through traditional loans.
Businesses may use the 7a loan for the following:
- Purchase commercial real estate
- Pay for machinery and equipment
- Buy an existing business
- Fund leasehold improvements
- Finance start-up business
- Acquire inventory
- Provide permanent working capital
The 7a loan allows for longer term financing (up to 25 years). This means lower payments and thus less stress on your business’ cash flow.
It is a federal loan guaranty program. This means you have a greater chance of getting needed financing because it allows lenders to approve more loans.
- This includes lending for projection-based deals, start-up businesses, and change of ownership, as well as more traditional requests.
Cash out of pocket (aka, “equity injection”) can be as little as 10% of the project.
Less money out of pocket means more money kept in the business or in personal assets.
Depending on the use of funds, the 7a loan provides up to 100% financing.
It gives a flexible collateral structure (i.e., you can use cash, convertible currencies, stocks, exchange traded funds, investment funds, bonds, etc.)
Loan awards are up to $5 million!
- That’s a lot of seed by which to grow your company.