SBA 7(a) Loan Program
- This loan is the most common of all SBA Loans because eligibility is based upon the business and the principals.
- Funds can be used for any type of business except those specifically prohibited by the SBA Regulations.
- Primary consideration in the underwriting decision process looks to the repayment ability of the borrower from the cash flow of the business. Other factors as important as cash flow include management capability, collateral, and owner’s equity contribution
- Loan proceeds may be used to start-up business, assist in the acquisition, operation, or expansion of an existing business, need for working capital or additional equipment, and construction (to name a few of the eligible uses)
- SBA term length and amortization depends on whether the loan will be used for business only purposes, used in conjunction with real estate or a combination of both. Terms and amortizations can go from 10 years to 25 years.
- SBA Loans are always recourse, which means that a personal guaranty for the repayment of the loan is required. Full recourse loans make the sponsors guarantying the loan responsible for any and all shortfalls between the loan balance and sales price in the event of default and foreclosure as well as any applicable legal and ancillary fees.