The 7(a) Loan Program is SBA’s primary program for helping small businesses with financing guaranteed for a variety of general business purposes.
UES OF PROCEEDS
· Equipment purchases (machinery, business vehicles) · Business purchase/acquisition (100% change in ownership) · Real estate purchase · Land acquisition and real estate construction · Real estate improvements · Refinance of existing business debt · Startup costs (case-by-case basis)
AMOUNTS · Minimum- $10,000 · Maximum – $5 Million
MATURITY · Inventory or working capital- Typically structured at 7 years but not to exceed a maximum of 10 years · Equipment, fixtures, or furniture- Typically structured at 7 years but not to exceed a maximum of 10 years, it may not exceed the economic useful life. · Real Estate, including acquisition, rehabilitation, renovation, or construction- Up to 25 years plus any interest period to reasonably complete the construction or improvements · 7(a) Refinancing- Must coincide with the remaining useful life of the assets being refinanced or use of proceeds chart |
INTEREST RATE AND TERMS
· Variable Rates – based on Prime Rate based on dollar amount of loan and term · Fully-Amortized over life of loan (No Balloon) · Pre-Payment Penalty- Under $350,000- None, Over $350,000- 5,3,1% · SBA Guaranty Fee- $25,000-$150,000- 2% $150,001 to $700,000- 3%, $700,001- $5Mill- 3.5% (SBA changes SBA fees from time to time) · Lender may charge up to $2500 packaging fee.
WHO QUALIFIES · Must be for profit and meet size standards · Good Character and credit management · Must be an eligible type of business
BENEFITS FOR BORROWERS · Long term financing · Improved Cash flow · Fixed Maturity · No balloons · No prepayment penalty under 15 years and $350,000
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