| Interest Rates: | 7.75 – 9.75% |
|
Loan Amounts: |
Up to $5.5 million |
|
Repayment Terms: |
Up to 10 years for working capital loans |
|
Minimum Requirements: |
10-20% down payment on purchases |
| Use of Loan Proceeds: |
Buy a business or franchise |
|
Prepayment Penalty: |
None |
|
Repayment cycle: |
Amortized monthly payments |
|
Time to Funding: |
30-60+days |
Fees and Costs: SBA guarantee fee, referral and packaging fees and closing costs, which could total between 3% and 10.5% of the loan amount. Most of these costs are typically added to the amount of the loan.
SBA 7(a) loans are available for both startups and more established small businesses. To qualify for an SBA 7(a) loan, you will usually have to meet the following minimum requirements:
- No recent bankruptcies, foreclosures, or tax liens
- While the SBA will not refuse to guarantee a loan due to lack of or insufficient collateral, a lender is less likely to approve a loan that isn’t backed by sufficient collateral.
- Strong cash flow, a sound business plan and accounts receivable, which will not substitute for collateral, may also enable you to obtain more working capital from the loan.
- A higher credit score, which will generally affect the interest rate, the length of the repayment term, and it could also help determine whether the rate be fixed or variable. For this loan program, the SBA limits the rate that lenders may charge to a maximum of 2.75% plus the prime rate.