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SBA’s 7(a) Loan Program – Financial Assistance to Small Businesses

The 7(a) Loan is a primary loan program for small businesses to help them with financial assistance in running their business. Under this program, loan guarantees are offered to the lenders and encourage them to offer financial help to small businesses having special requirements. The terms and other conditions of the loan, such as the loan amount guarantee percentage, will vary considerably depending on the type of the loan.

SBA 7(a) loan program description

The SBA 7(a) Loan program is specifically for rendering financial assistance to small businesses, and it is the most widely used loan program of the SBA (Small Business Administration). This is named after section 7(a) of the Small Business Act, which authorizes agencies to offer loan guarantees for businesses participating in SBA lenders working directly with American small businesses. The ultimate aim of this loan program is to assist the ‘for-profit’ businesses that are not able to get financial assistance from other sources.

Requirements for availing 7 (a) Loan

SBA offers loan guarantees to lenders offering loans for businesses, including sole proprietorships. There are certain special requirements to avail of this 7(a) Loan, which can be used for the following requirements.

  • For refinancing, acquiring, and improving real estate and buildings belonging to the business
  • As short and long-term working capital.
  • Businesses can use these funds to refinance their current business debt
  • For purchasing furniture, fixtures, and supplies for the business
  • They can use the loan amount for installing machinery and buying equipment
  • The loan amount can be used for a complete or partial change of ownership

The maximum amount that the business can avail under the SBA 7(a) Loan is about $ 5 million. The eligibility criteria to avail of the loan are the credit history of the business, nature of the business, area of operation of the business, etc. The lender will help the business figure out the best type of loan after ascertaining their needs.

Eligibility of the businesses to avail 7(a) loans

To be eligible for 7 (a) loan assistance, the business should satisfy the following requirements.

  • The business should be currently operating.
  • The business should operate for profit.
  • It should be located and operating from the United States.
  • It should qualify under the SBA business size requirements.
  • The business should not be able to obtain the credit it requires from other non-state, non-Federal, and non-local government sources.
  • Above all, the business should be creditworthy and be able to demonstrate a reasonable ability to repay the loan.

SBA 7(a) Loan Calculator

The best business loan is one that offers the most favorable rates of the business that it qualified for. This again depends on a number of factors, such as the years of business operation, the credit score of the business, its revenue, and other factors. As businesses compare the different loan options they have, they willow and estimate the total financing costs to ensure they can afford to take up potential new debt. To ascertain this, they can get help from the loan calculator.

The 7(a) loan calculator is an extremely useful tool to understand the borrowing cost of a small business. In the loan calculator, the business only has to enter the different loan amounts, the terms in years, and the interest rates to get their estimated yearly and monthly payments. Users can avail of the loan calculator tool available at the MySetAside website to offer the loan amount in exceptional approximation.