The Small Business Administration (SBA) 7(a) Loan Guarantee program is one of the most popular loan programs offered by the agency and is the basic SBA loan program. A 7(a) loan guarantee is provided to lenders to make them more willing to lend money to small businesses with "weaknesses" in their loan applications.
For example, a business startup would not have cash flow history to provide a lender with assurance of continued ability to pay back a loan, so the SBA 7(a) loan would serve to provide the lender with an increased guaranty against default.
The SBA warns, though, that lenders do not have to accept 7(a) loans.
SBA 7(a) loans are for a a maximum of $2 million, with SBA loan guarantee of no more than $1.5 million (75 percent). The terms of SBA 7(a) loans are 25 years for real estate and equipment and 7 years for working capital. Interest rates are based on the prime rate, the size of the loan, and the maturity of the loan.
The qualifications for eligibility for 7(a) loans include:
Here is a more detailed list of terms that make a business eligible for an SBA 7(a) loan:
It's difficult to state specifically how long the loan process might take because each loan is unique. You might want to ask your lender about an SBAExpress loan, for a smaller amount, which has a faster turnaround time.
Robert Longley, U.S. Government Expert, says Express Loans and some other types of SBA loans, may be funded within just a few days.
To get started, contact your local SBA office and ask about lenders, or use the SBA's LINC service that allows you to connect with potential lenders online.