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7(a) Loans: SBA’s Flagship Loan Program

Leticia SIn May, we published an article by our Vice President of Government Guaranteed Lending, Leticia Scearce, entitled What You Need to Know About Government-Guaranteed Lending, Part I, providing an overview of government-guaranteed loan programs offered by our bank. Here, Leticia delves deeper into SBA 7(a) loans. We hope this information is useful to you, and please don’t hesitate to contact us so we can answer any questions you may have.

Created under Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as amended), the 7(a) loan program has become the most popular and largest program under the Small Business Administration. For FY 2015, SBA approved close to $19 billion nationwide in SBA 7(a) loans.

SBA 7(a) loans are government-guaranteed loans, which means that the federal government provides a backing on the loan to the lender. This guaranty can range from 50 to 90 percent of the loan and is driven by the specific 7(a) loan product. The guaranty reduces the lender’s exposure or risk in the transaction, thus allowing many businesses to obtain a source of financing alternate to a conventional loan. The lender originates, services, performs any necessary liquidations and must not only comply at loan origination with the SBA policies and procedures, but throughout the life of the loan.

Below is a summary of the general parameters of 7(a) loans.


  • Less equity/cash down payment, preserving cash
  • Longer terms than conventional
  • No balloons, fully amortizing loans, no need to refinance again
  • CAPLines (revolving lines of credit) can be renewed annually, up to 10 years max
  • Equipment- up to 10 years
  • Real estate- up to 25 years
Uses Loan Maximum/Fees
  • Purchasing, constructing, renovating commercial owner occupied real estate
  • Purchase/refinance equipment
  • Working capital
  • Business Acquisition
  • Expansion & Exporting
  • Max SBA loan is $5 million (includes existing loans to borrower and affiliates plus new loan request)
  • SBA guaranty fee determined by loan size (2%-3.75% of guaranteed portion)

While a business may pay more in upfront fees for an SBA loan versus a conventional loan, the benefits far outweigh the cost. Preservation of capital is one of the biggest advantages of SBA loans.

There is a subset of loan programs under the 7(a) umbrella, so it is important to inquire about the programs offered by the lender. In our next government guaranteed loan blog, we will discuss SBA 504 loans and compare them to 7(a) loans. In future blogs, we will also discuss various 7(a) sub programs we offer.   Please contact us at (602) 992-5055 for more information.

Approved to offer SBA loan products under SBA’s Preferred Lender Program