What is a 7(a) loan?
The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:
- Short- and long-term working capital
- Refinance current business debt
- Purchase furniture, fixtures, and supplies
The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.
Am I eligible?
To be eligible 7(a) loan assistance, businesses must:
- Operate for profit
- Be considered a small business, as defined by SBA
- Be engaged in, or propose to do business in, the United States or its possessions
- Have reasonable invested equity
- Use alternative financial resources, including personal assets, before seeking financial assistance
- Be able to demonstrate a need for a loan
- Use the funds for a sound business purpose
- Not be delinquent on any existing debt obligations to the U.S. government
How do I use the 7(a) loan?
Basic uses for the 7(a) loan include:
- Long- and short-term working capital
- Revolving funds based on the value of existing inventory and receivables
- The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
- The purchase of real estate, including land and buildings
- The construction a new building or renovation an existing building
- Establishing a new business or assisting in the acquisition, operation or expansion of an existing business
- Refinancing existing business debt, under certain conditions
What do I need to apply?
When you’re ready to apply, you’ll need to gather the appropriate documents. Start the process by working with your local lender within SBA guidelines.
Use the following checklist to ensure you have everything the lender will ask for. Once your loan package is complete, your lender will submit it to SBA:
- Borrower information form: Complete SBA Form 1919 and submit it to an SBA-participating lender.
- Background and financial statements: Complete both SBA Form 912 (statement of personal history) and SBA Form 413 (personal financial statement). These help SBA and other stakeholders assess your eligibility.
- Business financial statements: Submit the following to help show your ability to repay a loan:
- Profit and loss statement – Current within 180 days of your application. Also include supplementary schedules from the last three fiscal years.
- Projected financial statements – Include a detailed, one-year projection of income and finances and explain how you expect to achieve this projection.
- Ownership and affiliations: Provide a list of names and addresses of any subsidiaries and affiliates, including concerns, in which you hold a controlling interest or that are otherwise connected to you.
- Business license or certificate: Provide a copy of the original business license or certificate of doing business. If your small business is a corporation, stamp your corporate seal on the SBA loan application form.