SBA 7A Loan approval process

What is the SBA 7A Loan Program?

First Financial Franchise Purchase, SBA Loan, Starting a Business, Working Capital

The SBA 7a is a popular loan program that was suspended after reaching the $18.7 billion limit for the year, has finally been renewed. The House of Representatives has approved the bill which will lift the SBA’s lending cap for the largest loan guarantee program to reach $23.5 billion. What is better is that the Senate has also passed the bill.

Governemnt Loan Guarantee

For entrepreneurs, the 7a program has been very valuable. Under the program, the SBA will guarantee up to 85% of the loan amount. This will mitigate the risk for lenders which makes it more attractive for a bank to supply funding. Without this, businesses may not have gotten the loan in the first place.

SBA Loans are used for

According to the SBA, business will use these loans for several purposes such as:

  • Providing short-term capital such as seasonal exporting and financing.
  • Providing long-term capital for inventory purchases or operational expenses.
  • Purchasing machinery, fixtures, materials, equipment, furniture, or supplies.
  • Buying land or purchasing, building, or renovating an existing building.
  • Expanding an existing business.
  • Refinancing debt in certain conditions

A 7a loan cannot be used to reimburse any owners for injection of capital or equity, nor are you allowed repayment of delinquent taxes or other funds that need to be held in an escrow or trust.

The SBA loan program encourages long-term small business financing. The loan maturities are based on your ability to repay the loan, the purpose of the loan, and the asset life financed with the loan. An SBA loan is secured by both personal and business assets until the recovery value is equal to the amount of your loan.

Just like with any government agency, SBA funding will take a lot of paperwork, which is time consuming. Although, the rates are good and 7a loans are easy to get. If you need quick cash, it isn’t for you. But, if you are able to provide documentation and don’t mind a longer wait for approval, then the SBA 7a Loan may be perfect for you. The fact that many small businesses are willing to borrow and then invest in their companies is a great sign for the economy. Renewing the 7a loan program made a lot of sense.

How do I apply?

If you are a startup or your existing business needs working capital up to 150K with no collateral, click here to learn about the SBA Express Loan program

If you need to borrow $150K to $350K please read about the SBA SLA2 Loan Program, for SBA loan up to 5Million please see the SBA 7A Loan page and contact us to learn more about your options.  Loans can be used for new or existing businesses, including franchises.  They can be used for businesses that require location buildout or for the acquisition of an existing business.

General information about SBA loan requirements for new and existing businesses.

First Financial’s knowledge staff is happy to give you a free consultation to discuss your lending needs.