SBA Loan Programs

SBA 7a Loan Program

Funding Amount:

The general rule is gross loan amount is limited to $5,000,000 per loan with the SBA guaranty amount limited to $3,750,000 to one borrower (and any affiliates). The SBA Guarantee is 85% for loans of $150,000 or less; 75% for loans over $150,000.

Eligibility Requirements:

  • Be an operating business;
  • Be organized for profit;
  • Be located in the United States (includes territories and possessions);
  • Be small (as defined by SBA); and
  • Demonstrate a need for the desired credit

Funds Uses:

  • Working capital (as of October 1, 2011)
  • Furniture and fixtures
  • Machinery and equipment
  • Purchase of land and building including construction and renovations;
  • Business Acquisition
  • Refinancing of existing debt

Financing Structure & Borrower Contribution:

Maximum Maturity

Working Capital – 10 Years

Furniture & Fixtures, Machinery & Equipment – Useful life

Real Estate – 25 years

Maximum Interest Rates

Prime/LIBOR Base Rate/SBA Optional Peg Rate + 2.25% for maturities under 7 years.

Prime/LIBOR Base Rate/SBA Optional Peg Rate + 2.75% for 7years or more.

Rates can be higher by 2% for loans of $25,000 or less; and 1% for loans between $25,000 and $50,000.

Application Deadlines:

Applications accepted on a rolling basis. 

SBA 7a Refinancing Program

Funding Amount:

The maximum refinancing loan amount is 5 million with a 75% maximum SBA exposure.

Eligibility Requirements:

  • Be an operating business
  • Be organized for profit;
  • Be located in the United States (includes territories and possessions);
  • Be small (as defined by SBA)
  • Demonstrate a need for the desired credit

Types of Debt Eligible for Refinancing:

  • SBA guaranteed loan proceeds may not be used to refinance debt originally used to finance a loan purpose that would have been ineligible for SBA financing at the time it was originally made.
  • A Borrower may consolidate any loan that is not a 7a with the same bank participating in the refinance.
  • SBA guaranteed loan proceeds may not be used to refinance debt in the personal name of the owners, with the limited exception of credit card debt in the personal name used for business purposes.
  • Demand note or balloon payment; Debt with an interest rate that exceeds the maximum SBA interest rate allowed for the SBA product being used; Credit card obligations used for business-related purposes; Over collateralized debt based on SBA’s collateral requirements.
  • Revolving Lines of Credit (short or long term) if the original lender is unwilling to renew the line or the borrower wants to restructure its debt to get a lower interest rate or longer term.

Funds Uses:

7a refinance proceeds may be used for working capital and fixed assets.

Financing Structure & Borrower Contribution:

Borrower equity depends on the ability to repay and an analysis of cash flow statement.

Application Deadlines:

Applications accepted on a rolling basis.

SBA 504 Loan Program

Funding Amount:

The maximum SBA debenture is 40% of project costs up to $5 million across all industries and sectors and can go up to $5.5 million for manufacturers and businesses creating energy efficient operations. There is no limit on the lender loan.

Eligibility Requirements:

  • Be an operating business
  • Be organized for profit
  • Be located in the United States (includes territories and possessions)
  • Be small (as defined by SBA)
  • Demonstrate a need for the desired credit

Funds Uses:

Proceeds from 504 loans must be used for fixed asset project with a useful life of at least 10 years, such as:

  • The purchase of land, including existing buildings
  • The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
  • The construction of new facilities or modernizing, renovating or converting existing facilities
  • The purchase of long-term machinery and equipment

The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. However, under current guidelines in the Jobs Act, proceeds may be used to cover previous expenses of this type 6 months prior and 18 months forward until September 30, 2012.

Financing Structure & Borrower Contribution:

Standard Financing

Third Party Lender: 50%

SBA / CDC: 40%

Borrower: 10%

New Business or Limited or Special Purpose Property

Third Party Lender: 50%

SBA / CDC: 35%

Borrower: 15%

BOTH New AND Limited or Special Purpose Property

Third Party Lender: 50%

SBA / CDC: 30%

Borrower: 20%

Application Deadlines:

No hard deadlines, applications accepted on a rolling basis.

SBA 504 Refinancing Program

Funding Amount:

Maximum loan amount is 90% of the fair market value of the fixed assets. SBA exposure ranges from 30 - 40% of the project up to $5 million. There is no limit on the lender loan. Multiple loans can be refinanced and loans must be disbursed within 6 months of approval date.

Eligibility Requirements:

  • Company must have existing loans that were originally used to finance 504 eligible costs (fixed assets). 85% of debt must have been used for eligible costs. However, cannot refinance existing 7a or 504 debt.
  • Company must have been in business for 2 years.
  • Debt must be at least 2 years old.
  • For refinance under the Permanent 504 Refi program, monthly payments must decrease by at least 10% for the portion that is being financed under the new terms. There is no 10% benefit test under the Temporary Refi program.

Funds Uses:

  • Permanent Program: Must be adding substantial new 504 project costs to the business (expansion or new location).
  • Temporary program (until September 2012): Borrower cannot use funds for expansion, but still able to cash out for eligible business expenses.

Funds can also be used for other business expenses (cash out). Other business expenses must be identified and verified. Eligible expenses include:

- Salaries

- Rent

- Utilities

- Inventory

- Incurred, but not paid prior to date of application

Financing Structure & Borrower Contribution:

Standard Financing

Third Party Lender: 50%

SBA / CDC: 40%

Borrower: 10%

New Business or Limited or Special Purpose Property

Third Party Lender: 50%

SBA / CDC: 35%

Borrower: 15%

BOTH New AND Limited or Special Purpose Property

Third Party Lender: 50%

SBA / CDC: 30%

Borrower: 20%

Application Deadlines:

No hard deadlines, applications accepted on a rolling basis. Deadline for the temporary refinancing program is September 2012.