What is a 7(a) loan?
The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:
- Short- and long-term working capital
- Refinance current business debt
- Purchase furniture, fixtures, and supplies
The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.
Types of 7(a) loans
Standard 7(a)
| Maximum loan amount | $5 million |
| Revolving lines of credit | Up to 10 years (Permitted only under CAPLines submission. See below) |
| SBA turnaround time | 5-10 business days |
| Forms | SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required) |
7(a) Small Loan
| Maximum loan amount | $350,000 |
| SBA turnaround time | 5-10 business days |
| Forms | SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required) |
SBA Express
The SBA Express program features an accelerated turnaround time for SBA review. The SBA will respond to your application within 36 hours.
| Maximum loan amount | $500,000 |
| Revolving lines of credit | Up to seven years with maturity extensions permitted at the outset |
| SBA turnaround time | Within 36 hours |
| Forms | Lender provides forms and procedures, plus SBA Form 1919 |
Export Express
The Export Express program provides exporters a streamlined method to obtain SBA-backed financing for loans and lines of credit up to $500,000. Lenders use their own credit decision process and loan documentation. The SBA will respond to your application within 24 hours.
| Maximum loan amount | $500,000 |
| Revolving lines of credit | May not exceed seven years |
| SBA response time | 24 hours |
| Forms | Lender primarily uses own forms and procedures, plus SBA Form 1919, Borrower Information |
SBA Senior International Credit Officers can provide in-house training to help lenders become proficient in the Export Express program. For more information on this training or for application assistance, contact your local U.S. Export Assistance Center.
Export Working Capital
Export Working Capital loans are for businesses that can generate export sales and need additional working capital to support these sales. Lenders review and approve applications and submit the request to the U.S. Export Assistance Center location servicing the exporter’s region.
| Maximum loan amount | $5 million |
| Revolving lines of credit | Terms of 12 months or less |
| SBA turnaround time | 5-10 business days |
| Forms | SBA Form 1920 |
| Collateral | Export-related inventory and receivable generated by export sales financed with EWCP funds. The SBA also requires personal guarantee of owners with 20% or more ownership. |
International Trade
International Trade loans provide long-term financing to businesses that are expanding because of growing export sales, or that have been adversely affected by imports and need to modernize to meet foreign competition.
Businesses can use International Trade loans for fixed assets for construction, building, real estate equipment, and for working capital for export transactions.
| Maximum loan amount | $5 million |
| Loan maturity | 10 years for permanent working capital, up to 10 years for machinery and equipment or the useful life of the equipment (not to exceed 15 years), and up to 25 years for real estate. |
| SBA turnaround time | 5-10 business days |
Am I eligible?
To be eligible 7(a) loan assistance, businesses must:
- Operate for profit
- Be considered a small business, as defined by SBA
- Be engaged in, or propose to do business in, the United States or its possessions
- Have reasonable invested equity
- Use alternative financial resources, including personal assets, before seeking financial assistance
- Be able to demonstrate a need for a loan
- Use the funds for a sound business purpose
- Not be delinquent on any existing debt obligations to the U.S. government
Some businesses may not qualify for a 7(a) loan. Read more about Terms, conditions, and eligibility.
How do I use the 7(a) loan?
Basic uses for the 7(a) loan include:
- Long- and short-term working capital
- Revolving funds based on the value of existing inventory and receivables
- The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
- The purchase of real estate, including land and buildings
- The construction a new building or renovation an existing building
- Establishing a new business or assisting in the acquisition, operation or expansion of an existing business
- Refinancing existing business debt, under certain conditions
What do I need to apply?
When you’re ready to apply, you’ll need to gather the appropriate documents. Start the process by working with your local lender within SBA guidelines.
Use the following checklist to ensure you have everything the lender will ask for. Once your loan package is complete, your lender will submit it to SBA:
- Borrower information form: Complete SBA Form 1919 and submit it to an SBA-participating lender.
- Background and financial statements: Complete both SBA Form 912 (statement of personal history) and SBA Form 413 (personal financial statement). These help SBA and other stakeholders assess your eligibility.
- Business financial statements: Submit the following to help show your ability to repay a loan:
- Profit and loss statement – Current within 180 days of your application. Also include supplementary schedules from the last three fiscal years.
- Projected financial statements – Include a detailed, one-year projection of income and finances and explain how you expect to achieve this projection.
- Ownership and affiliations: Provide a list of names and addresses of any subsidiaries and affiliates, including concerns, in which you hold a controlling interest or that are otherwise connected to you.
- Business license or certificate: Provide a copy of the original business license or certificate of doing business. If your small business is a corporation, stamp your corporate seal on the SBA loan application form.
- Loan application history: Include records of any loans you may have applied for in the past.
- Income tax returns: Include signed personal and business federal income tax returns of your business’ principals for the previous three years.
- Resumes: Include personal resumes for each principal.
- Business overview and history: Provide a history of the business and its challenges. Include an explanation of why you need the SBA loan and how it will help your business.
- Business lease: Include a copy of your business lease, or a note from your landlord, with the terms of the proposed lease.
If you are buying an existing business, gather the following information:
- Current balance sheet and profit and loss statement
- Federal income tax returns for the previous three years
- Proposed bill of sale including the terms of sale
- Asking price with schedule of inventory, machinery and equipment, and furniture and fixtures
- Franchise, jobber, or licensing agreements
- Proof of equity injection
You may be required to submit more SBA forms based on the specific use of proceeds or fees paid on a loans package or to a broker or agent.
Source: sba.gov