SBA 7a Loan Purpose
- Purchase of a real property
- Purchase of an existing business
- Expansion of the business or Start up business
- Leasehold Improvement
- Machine & Equipment
- Furniture & Fixture
- Inventory
- Working Capital
- Refinance of existing debts
SBA 7a Loan Guaranty
- 85% of loan amount for loans up to $150,000
- 75% for loans greater than $150,000
SBA 7a Loan Guaranty Fee
- $0 to $150,000 à 2% of guaranty portion
- $150,001 to $700,000 à 2% of guaranty portion
- $700,001 to $1,000,000 à 3.5% of guaranty portion
- $1,000,001 to $5,000,000 à $35,000 + 3.75% of guaranteed amount over $1,000,000
Example: For loan amount of $2,000,000, the guaranty portion = $2,000,000 x 75% = $1,500,000. Guaranty fee = $1,000,000 x 3.5% + $500,000 x 3.75% = $53,750
SBA 7a Loan - Terms & Conditions
- Maximum Loan Amount: $5.0 million
- Terms: 10 year for business, 25 year for real estate
- Interest Rates: WSJP + 2.75%, currently 6.0%
- Prepayment Penalty: Maturity >= 15 years, 5%, 3%, 1% for 3 years
- Maximum LTV: 75% for business, 85% for real estate loans
- Fees: SBA guarantee fee plus customary packaging fee
Collateral
- All business assets
- Personal assets of principals with 20% or more share in the business
- Assets owned by spouse
- Until entire loan amount is secured
Borrower Guaranty
- Full guaranty of all principals and with 20% or more share in the business
- Limited guaranty of anyone pledging collateral only
- Corporate guaranty of all entities with 20% or share in the business
SBA 7a Loan – Fees
- Guaranty Fee: as required by SBA
- Packaging Fee: not more than $2,500
- No points
- All other customary closing fees such as recording and filing fees, appraisal, environmental, title, attorney, etc.
Scenario 1: A prospect borrower currently owns a restaurant and looking to purchase the building that he is occupying. The building will be 100% owner occupied once the borrower purchases it. Lender will finance 85% of the purchase price securing the subject commercial real property as collateral.
Scenario 2: A prospect borrower is looking to set up a franchise restaurant which would cost of $800,000 in total. Lender will finance 75% of the total fund of project in setting up. The loan proceeds will go towards leasehold improvement, purchase of machine & equipment and furniture & fixture and working capital.
Not Eligible
- Cash out from real property
- Purchase of investment property
- Non profit organization
- Life insurance company
- Financial Company
- Business in Gambling
- Business Promoting Religion
- All illegal business entities
- Certain Franchise with unacceptable franchise agreement, such as 7 Eleven
Apply for SBA 7(a) loan or request more information.
Learn more about SBA 504 loan
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