The SBA’s 7(a) loan program is one of the primary and most popular programs by the SBA. Obtaining financing for your small business can be a challenging task and this article from the SBA explains some important details about how the 7(a) loan could be the right option for your business. In order to be eligible for this loan you must meet certain requirements. Some of these requirements include demonstrating a need for funds, having a sound business purpose, as well as meeting other specific eligibility requirements. The 7(a) loan amounts up to $5 million which can be used to fund start-up costs and buy equipment. These funds can also be used for the following:
· Purchase new land (including construction costs)
· Repair existing capital
· Purchase or expand an existing business
· Refinance existing debt
· Purchase machinery, furniture, fixtures, supplies or materials
The 7(a) program offers flexibility, longer terms, and potentially lower down payments compared to other financing options. This loan also offers specialized programs for individuals interested in exporting; those located in underserved communities; members of the military community; and small businesses owners looking to meet their short-term and cyclical working capital needs. As we mentioned earlier the 7(a) loan offers longer terms. Generally the term loans are repaid in monthly payments of principal and interest.
When considering the 7(a) loan program keep in mind that the SBA doesn’t fund these loans directly to small business owners. However, banks receive a guarantee that the SBA will repay a portion of the loan if you default on payments. So if you think that the SBA’s 7(a) loan program is suitable for your business then click on this link (http://www.sba.gov/community/blogs/sbas-7a-loan-program-explained) to get the full explanation and check out the other SBA resources to help prepare you for the loan application.