SBA's 7(a) Guaranty Program
The 7(a) Loan Guaranty Program is the SBA's primary loan program. It is the most flexible as the Agency can guarantee financing for a variety of general business purposes. Benefits to Borrower: Longer terms; no balloon payments; loans based on cash flow, not collateral. Benefits to Lender: Reduces lenders risk and allows lender the opportunity to extend financing to start-ups, change of ownership or specified industry type loans not allowed by lender policy; and lender may sell SBA guaranteed portion on the secondary market.
Use: Applicant must be a for-profit entity located in the United States and its territories; 51% ownership must be by U.S. residents and operations located in the U.S.; and must meet SBA size requirements.
Amount: 2,000,000.00
Exposure: SBA can guarantee up to 85% of loans of $150,000 or less, and up to 75% of loans above $150,000. Maximum guarantee in most cases is $1,500,000.
Interest Rate: Interest rates may be fixed or variable and are determined by the amount and maturity.
Collateral: Sufficient assets to adequately secure the loan. Personal guarantees are required of all 20% or more owners of the business.
Term: SBA loan programs are generally intended to encourage longer term small business financing but actual loan maturities are based on: the ability to repay, the purpose of the loan proceeds, and the useful life of the assets financed. However, maximum loan maturities have been established: twenty-five (25) years for real estate and equipment; and, generally seven (7) years for working capital.
The 2009 Recovery Act has modified the 7(a)/504 Loan programs and added new loan programs. Contact SBA for current information regarding these changes.
There are several specialized programs under the 7(a) Guranty Program that address specific needs of start-up or established businesses. They include SBAExpress, Caplines, Seasonal Lines of Credit, Standard Asset-Based Line, Small Asset-Based Line, Export Express and Export Working Capital Program.
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Small Business Administration (SBA)
Federal Building, 68 Sewall Street
Augusta , ME 04330
207-622-8274
207-622-8277
[email protected]
www.sba.gov/me

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