The Most Widely Used SBA Loan Available
The SBA 7(a) loan is the workhorse of small business lending — buy a business, acquire real estate, refinance debt, fund a franchise, or cover working capital, all in a single loan with terms conventional lenders can't match.
The loan can be used to buy out your partner provided they own 20% or more of the ownership. The loan is also popular to purchase existing or build from the ground up hotels, franchised restaurants, convenience stores, day cares, medical facilities, and most all "for profit" businesses. All SBA 7(a) loans are assumable.
The reason for the SBA 7(a) loan popularity is due to the many benefits borrowers receive. This loan is given a long repayment term of 25 years in order to reduce monthly payments. This type of loan is great for freeing up cash flow for business expansions. There is also working capital plus inventory included in the amounts allowed by SBA. The main purpose for the SBA 7(a) loan is for businesses and start-ups to obtain the funding needed that may not be available through more conventional methods.
SBA 7(a) loans can be used for many purposes as described below:
- New Business
- Complete renovations
- Expansion
- Lease hold agreements
- Refinance current commercial real estate
Purchase another business that is including or excluding real estate such as:
- Franchise
- Professional practice
Loans up to $5,000,000 for franchise businesses such as:
- Restaurants
- Hotel/Motels
This allows financing for most "for profit" industries such as:
- Gas Station, Lube Center, or Carwash
- Assisted Living Facilities
- Day Care
- Self-Storage
- Private Schools
- Manufacturing
- Heavy Equipment
- And more!
Typically available:
- Start-Up
- Expansion
- Equipment purchases
- Purchase Business or Acquisition
- Account Receivable
Financing is available to soft cost related to collateral/loan such as:
- Appraisals
- Environmental
- Interim Interest
Loan Terms at a Glance
Real Estate
- 90% financing available
- Up to 25-year term
- Prepayment penalty: first 3 years
Business Acquisition
- 80% financing available
- Up to 10-year term
- No prepayment penalty
Refinancing
- 100% financing available
- Up to 25-year term
- Prepayment penalty on terms over 15 years
Interest rates are based on the prime lending rate.
There are no prepayment penalties on loans with a maturity of less than 15 years. The prepayment penalty for loans exceeding 15 years is 5% the first year, 3% the second year, and 1% the third year. This is an SBA requirement and it cannot be changed.
SBA 7(a) Loan Readiness Workbook
Everything you need to walk into any bank or lender fully prepared — and completely confident. Compiled by Hershel Pierce from 40+ years of SBA lending experience. Use it with any lender, any broker, any bank.
Ready to Get Pre-Qualified?
Good deals don't wait. Text Hershel today for a free, no-obligation financing analysis.