SBA 7a Loan Program
What is a SBA 7a loan and what are the requirements in getting one? Start knowing it now. Have you always aspired to become your own boss and put up your own business but do not know where to get the capital to start up?
Well, if you fit the description then worry no more. In partnership with banks and several other banking institutions, the SBA or the Small Business Administration of the United States offers loan programs that come with guarantee to provide aid to entrepreneurs like you to realize their business potentials.
There are several programs that the SBA offers and the 7a Loan program is one to boot.
Introduction to SBA 7a Loan Program
The 7a program is one of SBA’s leading and resilient programs that covers and helps entrepreneurs with variety of business coverage. This loan is ideal for those who are intending to start up for those who already have existing small businesses. This loan is being offered by means of lending institutions in the market. What this means is that financial aid is extended to aspiring and existing entrepreneurs with the use of the conventional channels of lending.SBA plays its part by acting as the guarantor to a portion of the loan placed by the borrower.
There are various types of 7a loans namely: Express programs, export loan programs, Rural Lender Advantage program and Special Purpose Loan Program. The type which you will apply will just depend on what assistance you need for your business – whether it is working capital, furniture and fixtures or perhaps equipment or machinery that you need. Renovations and constructions also qualify to this type of loan which truly makes it flexibly and thus of great help to the entrepreneurs in the country.
Eligibility requirements are broad which allows the loan to cover most of the small business entrepreneur needs. This includes operating as a for-profit company, maintain business in the US , ability to meet the SBA standards when it comes to size, be an eligible type of business, usage of proceeds for the approved purpose, not have funds from other identified or available resources, ability to repay the loan amount, good character along with business plan and having the expertise when it comes to management of the business.
Just like any other loans, specific terms and conditions would also apply to this. This includes the loan amount, maturity terms, interest rates, percentage of guaranty, fees, combination financing, prohibited fees and prepayment penalties.
Since the loan still comes from the commercial lender, it is important to note that the application is still subject to the review of the lender – not the Government, even though the government offers to act as part guarantor to the loan. What this means of course is that the application still needs to meet the loan requirements and checks to be granted. Either the loan will be approved on its own, or will require the support of SBA in terms of financing.
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