Why SBA 7(a)?
There are many advantages for SBA 7(a) loans. The small business administration designed this program to help small business owners who might not otherwise qualify, gain access to the credit needed to manage and grow their businesses. The SBA guarantees a portion of your SBA 7(a) loan, effectively lowering the credit risk to the lender. If you’ve been turned down for a conventional business loan, we may be able to help qualify you for an SBA 7(a) loan.
In most instances, an SBA 7(a) loan can provide you with access to financing with less money down than a conventional loan. In our current environment, many lenders are requiring as much as 30-40% down on commercial real estate purchases, and some aren’t lending money at all without a significant deposit relationship from the borrower.
A Bank of Edison SBA 7(a) real estate loan can be secured with as little as 15% down for borrowers with strong, stabilized cash flow.
How is an SBA 7(a) loan structured?
SBA 7(a) loans are generally termed out over 10, 15 or 25 years with no balloon payments. Real estate loans will have a term of 25 years. Business acquisition loans are termed out over 10 years, and equipment loans will have a term not to exceed the useful life of the equipment. The interest rate on SBA 7(a) loans is prime variable, repricing every quarter.
How long does it take to close an SBA 7(a) loan?
Many borrowers wrongly believe that an SBA loan will drag out for months before closing. As a community bank, the Bank of Edison has the ability to turn your SBA loan around quickly. We can generally get loan approval within a week, and we can close your SBA 7a loan in as little as 45 days. However, all of this depends on how quickly the borrower is able to get us the information we need, when we need it.
How much can I borrow through the SBA 7(a) program?
The maximum loan amount is $5,000,000. That is an aggregate amount, meaning if you have other SBA 7a loans, your total loan amount cannot exceed five million.
Who is eligible to borrow through the SBA 7(a) program?
For an SBA 7a loan, you must:
- Be an operating business
- Operate for profit
- Be located in the U.S.
- Be considered a small business, as defined by SBA
- Demonstrate a need for a loan
- Not be delinquent on any existing debt to the US Government
- Be creditworthy and can reasonably assure repayment of the loan
Does an SBA 7(a) loan carry any prepayment penalties?
For SBA 7a loans that have a term of 15 years or more, there is a 3-year declining (5%, 3%, 1%) prepayment penalty if the borrower prepays more than 25% of the outstanding balance. After the third year, there is no prepayment penalty.
Interested in an SBA 7a loan?
Our team of experienced lenders is available to talk to you today. Reach out to us to find out how we can help.
Ready to start the process?
Fill out our online form to see if you qualify for a Bank of Edison SBA 7(a) loan.
The Bank of Edison does not lend in the following states – Arizona, California, Hawaii, Nevada, North Dakota, South Dakota or Vermont