SBA Term Loan
The SBA 7(a) loan is a versatile financing option backed by the Small Business Administration (SBA), designed to help small businesses cover a variety of expenses, including real estate, working capital, and equipment.
Eligibility for an SBA 7(a) Loan
To qualify, borrowers must generally meet the following criteria:
✅ Be a for-profit business operating in the U.S.
✅ Meet the SBA’s definition of a small business.
✅ Demonstrate a sound business purpose for the loan.
✅ Show an ability to repay the loan through business revenues or other means.
✅ Have invested equity in the business.
✅ Exhaust other reasonable financing options before applying.
Eligible Building Types for Up to 100% Financing In addition to general and mixed-use buildings, eligible property types may include:
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Office Buildings
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Retail Spaces
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Warehouses and Industrial Facilities
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Hotels and Motels
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Restaurants and Cafés
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Healthcare Facilities (e.g., medical or dental offices)
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Childcare Centers
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Auto Repair Shops and Service Centers
The key requirement for real estate purchases is that the business must occupy at least 51% of the space in an existing structure or 60% for new construction.
Borrower Requirements
To secure an SBA 7(a) loan, borrowers typically need to provide:
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A solid business plan.
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Good credit history (both business and personal).
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Adequate collateral for the loan.
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Proof of sufficient cash flow to manage debt repayment.
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Down payment (often 10%–20% for some property types but can be 0% for 100% financing scenarios).
Permitted Uses of SBA 7(a) Loan
Funds can be used for:
✅ Purchasing or refinancing commercial real estate
✅ Acquiring land or buildings
✅ Constructing, renovating, or expanding a property
✅ Buying equipment, machinery, or inventory
✅ Working capital for day-to-day expenses
✅ Refinancing existing debt under better terms
✅ Starting or acquiring a business
100% Financing
Yes, the SBA 7(a) loan can provide up to 100% financing under certain conditions, particularly for owner-occupied commercial real estate and business acquisitions. However, qualifying for 100% financing is more challenging and requires meeting specific criteria.
When Does SBA 7(a) Offer 100% Financing?
✅ Commercial Real Estate Purchases:
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The borrower’s business must occupy at least 51% of an existing building or 60% of a newly constructed building.
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Strong financials and cash flow are typically required.
✅ Business Acquisitions:
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If the borrower is acquiring an existing business with stable cash flow and a solid track record.
✅ Debt Refinancing with Improved Terms:
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Refinancing existing business debt may qualify for 100% financing if it strengthens the borrower's financial position.
✅ Partner Buyouts:
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If an existing owner is buying out a partner, 100% financing may be possible.
Key Requirements for 100% FinancingTo qualify, borrowers typically need to demonstrate:
✅ Strong Cash Flow – To cover debt service without additional collateral.
✅ Good Credit Score – Generally 680 or higher.
✅ Solid Business History – Established businesses with proven profitability are more likely to qualify.
✅ No Significant Collateral Shortfall – While SBA loans may require less collateral than conventional loans, lenders may still evaluate available assets.
What Borrowers typically have to provide:
✅ Personal and Business Tax Returns – Typically 2-3 years of records.
✅ Debt Schedule – Listing all current business debts.
✅ Business Licenses and Permits.
✅ Personal Financial Statement – Detailing your personal net worth.
✅ Resumes for Key Owners/Managers – Demonstrating relevant experience.
✅ Collateral Information – If required.
