At USAmeriBank we are fortunate to meet many entrepreneurs and small business owners. Many of these folks are growing and looking for financing options that will allow them to take advantage of opportunities.
These business owners have often heard about “SBA loans,” but are not sure how they work. They are unaware of the characteristics of the different programs, don’t know if they qualify, and are not sure how to apply.
What is a SBA 7(a) Loan?
An SBA 7(a) loan is one of a variety of lending programs that is supported by the U.S. Small Business Administration (SBA), a federal agency of the United States government. The SBA sets guidelines for loan qualification and provides a guarantee for a percentage of the loan to the lending partner, usually a bank.
The guarantee makes the loans less risky for the participating bank, which in turn makes it more likely that the bank will lend the funds that businesses needs to operate and grow. It’s a win-win for the banks and for the business borrowers.
The 7(a) program is the flagship program of the SBA. It offers the greatest flexibility and is the subject of this blog.
What Can I do with an SBA 7(a) Loan?
The SBA 7(a) program is commonly used to provide working capital, acquire equipment, purchase real estate, or finance leasehold improvements. It can also be used for debt consolidation or a combination of several uses. The loan maturity is up to 10-years for working capital and up to 25-years for fixed assets.
What do I need to apply for an SBA 7(a) Loan?
The first step is to contact an experienced SBA lender to review your specific needs. The Lender should be an active SBA Lender with years of experience in the program. They will be able to help you navigate the program, but a few items they will generally need:
- Three years of business and personal tax returns;
- A business plan showing the forecasted operations of the company;
- A summary of your background and management qualifications, and that of your management team;
- A personal financial statement showing your assets and liabilities;
- A listing of collateral that you can offer as security for the loan.
Applying for a Small Business Administration loan can seem like a complicated process. At USAmeriBank, the SBA Program is a core competency of the Bank. We are deeply experienced and leaders in every market that we cover. Please contact us at 866.979.2265 or www.USAmeriBank.com/SBA and we will connect you with a local professional.