Are You Eligible for an SBA 7(a) Loan?

The SBA 7(a) loan is a type of business loan that is offered by the Small Business Administration. The SBA offers this loan in order to help small businesses that would not otherwise be able to secure financing from a traditional lender. Not every business is going to be able to qualify for this type of loan because the requirement specifically cater to certain types of businesses.

Basic Requirements

In order to qualify for this type of loan, you are going to have to have a business that operates for a profit. If you are a nonprofit entity, you are not going to be able to use this specific loan program. The SBA offers other loans that might help you out if you do not fit into the mold. However, this one is specifically designed for for-profit businesses. In addition, you must do business within the United States. This is not a program for companies from foreign countries. The government recognizes the importance of small businesses in the United States and this program is designed to help boost community businesses.

Size Requirements

In order to get this type of loan, you are going to have to qualify as a small business according to the Small Business Administration. These loans are not designed to help companies that have already expanded into large corporations. Every industry has different standards that are used to determine what is a small business. You can look on the SBA website in order to find out what qualifies as a small business in your particular industry. For example, if you are in most sectors of the retail industry, the company net worth has to be less than $7 million. This is the same limit for most service providers as well. If you are in the manufacturing industry, you are going to have to have at least 500 employees.

Types of Businesses

There are many different types of businesses that can qualify for the SBA 7(a) loan program. In order to get a comprehensive list, you will need to consult with the SBA. Some businesses that are included are franchises and recreational clubs. You can qualify for the loan if you are a medical facility or a farm. There are also some businesses that do not qualify for this type of loan. For example, if you are a real estate investment firm, your business is not going to be able to qualify for this program.

Terms

These types of loans have specific terms that you will need to be aware of. For example, they are going to give you as long as 25 years to pay off the loan. The maximum amount that can be borrowed is $2 million. You will also receive a fixed interest rate that will fluctuate, depending on the size of the loan.

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