7(a) Small Business Loan – A Financial Help for Businesses

7(a) Small Business Loan is part of the business financing assistance program of the  Small Business Administration. It primarily provides loans for small businesses owners that suffer financial hardship within their respective businesses.

The said program has a wide variety of loan types where small business owners can apply. Each loan type has its loan amount limit and loan terms.

Moreover, the main goal of the 7(a) Small Business Loan is to help each small business owner to regain the stability of their business.

7(a) Small Business Loan in the United States that is backed and guaranteed by the U.S. Small Business Administration (SBA). It was originally from the 7(a) of the Small Business Act that authorizes the SBA to provide loans for American Small businesses.

Furthermore, there are 42,000 guaranteed 7(a) loans back in 2020. The 7(a) Small Business Loan is continuously helping to recover or improve each small business throughout the United States.

Types of 7(a) Small Business Loan

The 7(a) Small Business Loan is divided into different types. These loan types allow the borrowers to find the loan that will suit and match them under the 7(a) Small Business Loan.

However, the loan amount can also be the basis of what type of loan an individual must get. Refer to the list below for the types of 7(a) Small Business Loan.

7(a) Small Loan

The 7(a) Small Loan provides loans to assist each small business with its financial needs. Individuals can borrow up to $350,000 with a maximum of 90% of a loan guarantee.

Export Express Loan

The Export Express Loan allows business borrowers to improve their export development related to the business. It can provide up to $500,000 with a loan guarantee of 90% for loans under $350,000 and 75% for loans above $350,000.

Express Loan

The Express Loan supports business borrowers to expedite their smaller loans. The said loan type can allow individuals to borrow up to $1 million and have a loan guarantee of 75% for loans under $350,000 while 50% for loans above $350,000.

Standard 7(a) Loan

The Standard 7(a) loan can help borrowers within several aspects of their businesses such as capital, supplies, and equipment, or real state as long as it will help for the expansion of the business. It can provide up to $5 million of loan amount with a 90% of a loan guarantee.

Export Working Capital Loan

The financial assistance from the Export Working Capital Loan can provide aid for businesses as capital for their export sales. The maximum loan amount for this loan type is $5 million with a loan guarantee of 90%.

International Trade Loan

The International Trade Loan allows borrowers to fund their long-term export sales and enhance their business within foreign competitors. It can provide loans up to $5 million with a 90% of loan guarantee.

CAPLines of credit

The CAPLines of Credit provides loans for borrowers to finance their short-term or seasonal capital for work. The said loan type can provide up to $5 million with a 90% of loan guarantee.

Terms of 7(a) Small Business Loan

Small Business Loan

Where Can I Use the Funds

The financial assistance from the 7(a) Small Business Loan is available to use through a broad range of business activities.

  • Capital for long-term and short-term business operations.
  • Refinance the depths of the business
  • Supply the equipment, furniture, materials, and machinery.
  • Funds to buy land, real estate, or property that can help for the business expansion.
  • Construction of a new building.
  • Renovation of the business’ buildings.
  • Establish a new business or operate and expand the existing business.

Eligibility

To apply for the 7(a) Small Business Loan, the borrowers must meet the requirements for both of the General SBA Loan Eligibility and 7(a) Small Business Loan Eligibility.

See the information below for the eligibility rules for both of the General SBA Loan Eligibility and 7(a) Small Business Loan Eligibility.

  • Businesses must operate for profit.
  • Businesses are entitled as “small businesses” based on the SBA requirements.
  • Businesses must engage within the United States.
  • Businesses must have invested equity that is reasonable.
  • Businesses must demonstrate the need for a loan.
  • The borrower must have used other financial resources for the business such as personal assets before applying for the loan.
  • Borrowers must use the funds for business-related purposes.
  • Borrowers must not have any debt obligations within the US federal government.

Required Documents

The required documents for the application of the SBA 7(a) loan are the following:

  • SBA Form 1919 (Borrower Information Form)
  • SBA Form 912
  • SBA Form 413
  • Financial statements of the business. This includes profit and loss statements, balance sheets, and projected financial statements.
  • Business license or certificate
  • Business lease
  • Loan application history
  • Income tax returns
  • Business owner’s resume.
  • Business overview and history

How to apply

See the provided steps below for the application process of the 7(a) Small Business Loan. 

Find SBA 7(a) Lender

Various financial institutions provide loans for the SBA 7(a). Most of these are banks and credit unions. Borrowers must have contact with their respective lenders to start the process of the said loan.

Gather Your Documents and Submit Your Application

Borrowers must prepare the necessary documents that will be needed for the application process. Also, lenders can help their respective borrowers with the preparation of their documents.

Wait for Your Loan to be Approved and then Close it

After the documents, the loan process with the SBA will start. Just wait for your lender and the SBA for your loan application to be approved.

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