Out of all of the Small Business Administration’s loan programs, the SBA 7(A) loan program is the most popular. In 2018 alone, the SBA approved 60,353 7(a) loans totaling nearly $25.4 billion, with an average approved loan amount of $420,401.
But if you’re a small business owner, you may be wondering about the real value of this buzzed-about loan program, and how it can help you grow your business. The short answer is that there are a variety of factors driving the appeal of the SBA 7(A).
The intrinsic flexibility of the SBA 7(A) is one advantage, as the capital can be used for a wide range of business purposes, from equipment to real estate—all depending on your unique needs. Many business owners are also attracted to the longer terms, which can reach 25 years, loan amounts of up to $5 million and lower down payments.
Not too shabby, indeed. But what else should savvy business owners know about SBA 7(A) loans? Here’s a quick primer on the SBA 7(A) loan program, which is a must-read for any growth-minded small business.
How do I determine my eligibility for the SBA 7(A)?
To be eligible for the SBA 7(A) loan, a for-profit business must meet the SBA’s definition of a “small business.” Manufacturers, wholesalers, retailers and service businesses fall under this umbrella, as do independent or franchise businesses.
At Cornerstone Capital Lending, we provide SBA 7(A) loans for property types that include:
- Office: Professional, Condominium, Medical, Dental, Veterinarian and Mixed-Use
- Industrial: Land Development, Heavy and Light Manufacturing, Warehouses & Flex/R&D
- Retail/Shopping Center: General
- Special Use: Assisted Living Facilities, Senior Housing, Funeral Homes, Day Care Facilities, Gas Stations, Restaurants, Hotels/Motels, Auto Care, Software Companies, Data Storage, Franchises and many more.
What are the benefits of SBA 7 (A) loans?
There are various perks drawing small business owners to the SBA 7 (A) loan program, such as lower down payments and a loan structure that often offers lower interest rates and fees than unguaranteed loans. SBA loans “are significantly more affordable than online short-term loans,” according to Fundera. At Cornerstone Capital Lending, we’re dedicated to leveraging our banking relationships to help our clients get the best rates, and loans, for their unique business neds.
Longer terms are another advantage for business owners. For real estate, this can mean up to 25 years; for equipment, 10 years; for working capital, 7 years.
These funds can be used depending on your business’ needs. Possible uses include:
- The purchase of land or real estate
- Equipment, machinery, furniture, fixtures, supplies, etc.
- Both short-term and long-term working capital needs
- Refinance existing business debt
- The purchase of an existing business
At the end of the day, with extensive uses for capital and some of the lowest interest rates possible, the SBA 7(A) loan is the most popular program for a reason.
Interested in reaping the benefits of the SBA 7(A) loan for your own business? At Cornerstone Capital Lending, we make your SBA loan application a quick, simple and stress-free process to help you grow your business. Contact us to get started today.