SBA 7(a) Loan Guaranty Program
The following general information is provided so that you will have a better understanding of the SBA 7(a) loan program. The information is general and each loan application is reviewed individually by Small Business Assistance Corporation.
- The U. S. Small Business Administration generally does not make direct loans. The SBA guarantees loans submitted and made by financial institutions, generally banks.
- The SBA guarantees loans up to $5,000,000 with a maximum guaranteed loan amount of $3,750,000. There is no theoretical minimum, however, most lenders are reluctant to process commercial loans less than $50,000. (SBAC provides other loan programs for lower loan requests).
- The prospective borrower will generally be required to provide a capital contribution. The minimum contribution will normally be 10% of project request.
- An existing business will be required to provide financial statements showing the business:
- is viable and profitable
- does not have delinquent taxes
- is a for-profit concern
- has proper management in place
- Eligible Uses of Proceeds include:
- Refinancing of current debt
- Working Capital
- Renovation, construction, or purchase of land and building
- Business Acquisition
- Furniture, Fixtures, and Equipment
- Soft/Closing costs
- Franchise Fees
- Examples of business proposals/projects that are INELIGIBLE for the SBA guaranteed loan program are:
- Partial purchase of a business
- Lending institutions
- Real Estate held for speculation, investment or rental
- Religious organizations and their affiliates
- Non-profit entities
The SBA charges the lender an incremental guaranty fee up to 3.75% on the guaranteed portion of the loan. A .55% monthly fee on the outstanding balance of the guaranteed portion is also paid to SBA by the lender. SBA policy allows the lender to pass these fees on to the borrower. SBAC charges a $2,500 packaging fee.
The rate on the loan will be determined by the bank making the loan, and will be within the parameters established by the SBA. The SBA’s guaranteed loan program interest rates are generally based on the prime rate, as advertised in the Wall Street Journal, according to the following schedule for loans over $50,000:
- Loans with a maturity of less than 7 years: Prime rate plus 2.25%. (Maximum)
- Loans with a maturity of 7 years or more: Prime rate plus 2.75%. (Maximum)
The SBA guaranteed loan maturity (maximum length of loan) is based upon the following schedule:
- Working Capital: 10 years
- Equipment: 10 years or useful life
- Real Estate: 25 years maximum
BUSINESS PLAN FOR START UP BUSINESSES
A BUSINESS PLAN that includes the items below will be most helpful in presenting a proposal to a lender for consideration.
- Projected profit and loss statement
- Cash Flow projections
- Market analysis
- Marketing strategy
- Description of the business
- Product or services advantage
- Management ability (resumes of the key staff should be included)
- 3 years financial information (personal & business)
- Cash requirements
HOW TO APPLY
Obtain a loan application:
- Apply Online
- Download the Application (PDF format) and return completed form by fax to (912) 232-0385
- Contact the SBAC by Phone at (912) 232-4700
- Visit the SBAC Office: 111 E. Liberty Street, Suite 100 – Savannah, GA 31401
All information is subject to change without notice.