The Small Business Administration has delivered millions of loans and other forms of financial assistance since its founding in 1953. A cornerstone of the SBA loan program is the SBA 7(a) loan—the most common form of financing offered through the SBA. Just how common is the SBA 7(a)? In 2014, the SBA approved more than 52,000 SBA 7(a) loans totaling $19.19 billion. That’s a 7.4% increase from the dollar value of the loans it granted in 2013.
SBA 7(a) loans are secured by a 1st Deed of Trust/Mortgage on commercial real estate and must meet SBA qualifications, with a maximum loan-to-value of 90%. Last year, the average SBA 7(a) loan was $417,316.
Why are so many businesses exploring SBA 7(a) loans? For qualifying business owners, this loan program can have numerous perks: lower down payments, longer repayment terms and a loan structure that often offers lower interest rates and fees than unguaranteed loans.
Here’s a quick overview of our SBA 7(a) financing program.
What’s the maximum SBA 7(a) Loan Amount?
What is the standard project structure for an SBA 7(a) loan?
- 75% to 90% Loan-to-Value (LTV)
- 10% to 25% Equity Injection
What’s the maximum LTV for the SBA 7(a) loan?
- • Multi-Purpose Real Estate – Up to 90% LTV
- Limited or Special Purpose Real Estate – Up to 80% LTV
What is the loan maturity and amortization structure?*
- Real Estate – Up to 25 years
- Business Acquisition – Up to 10 years
- Equipment Acquisition – Up to 10 years
- Debt Refinancing – 7 to 10 years
- Permanent Working Capital – Up to 7 years
* Blended maturity and amortization will be applied depending on final structure as determined by SBA guidelines.
What property types are eligible for an SBA 7(a) loan?
- 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.
How can I use SBA 7(a) loan funds?
- To purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities.
- To acquire equipment, machinery, furniture, fixtures, supplies, or materials.
- For long-term working capital, including the payment of accounts payable and or for the purchase of inventory.
- To refinance existing business debt not already structured with reasonable terms and conditions.
- For short-term working capital needs, including seasonal financing, export production, construction financing, and for financing against existing inventory and receivable under special conditions.
- To purchase an existing business.
What are my rate options and fees?
We leverage our banking relationships to help our clients get the best rates in the industry. Maturities up to 25 years are available based on use of loan proceeds.
What are my occupancy requirements?
The subject property must maintain a minimum of 51% occupancy (60% for new construction).
At Cornerstone Capital Lending, we provide SBA 7(a) lending across industries nationwide. Are you ready to explore an SBA 7(a) loan for your auto repair, veterinary, gas station, hotel or other small business? Our team will walk you through the loan process so that you can get back to what you do best: growing your business. Get started today.