- 7(a) loans are the most basic and often used loans of the SBA’s business loan programs.
- 7(a) loans are only available on a guaranty basis. This means that they are provided by lenders who choose to structure their own loans in accordance with the SBA’s requirements and who apply and receive a guaranty from the SBA on a portion of the loan. The SBA does not fully guarantee 7(a) loans. The lender and SBA share the risk that a borrower will not able to repay the loan in full. The guarantee is against payment default. It does not cover imprudent decisions by the lender or misrepresentation by the borrower.
- To buy an existing business
- Start up capital for a new business
- Working capital
- To refinance existing debt
- To purchase new or used equipment
- To purchase real estate for business purposes
- To finance accounts receivable
Businesses cannot be engaged in illegal activities, loan packaging, speculation, multi-sales distribution, gambling, investment or lending, or have an owner on parole.
- Real Estate Investment
- Lending Activities: Bank, Finance and Leasing companies, Insurance companies, etc.
- Pyramid Sales Plans
- Illegal Activities
- Gambling Activities
- Charitable, Religious, or Other Non-Profit organizations
- Other Speculative Activities
The 7(a) Loan Program has a maximum loan amount of $5 million dollars. If a business receives an SBA guaranteed loan for $2.0 million, the maximum guaranty to the lender will be for $1.5 million or 75%.
- Real Estate and Equipment: Maximum 25 years
- Working Capital: Generally 10 years