SBA 7a Loans for Small Business

Our SBA 7a Loans can be used to start or acquire a business* or franchise, access working capital for equipment purchases or inventory, buyout a partner(s), and expand or refinance your business.

* Today we’re seeing a lot of SBA approvals for business acquisitions

Free Consultation – No Obligation

What Do You Need To Qualify?

What Is SBA 7a Loan?

SBA 7a loans are backed by the government SBA (Small Business Association) agency for the purpose of financing US small businesses.

SBA loans are one of the most desirable and sought-after types of business loans. Many small business owners apply for SBA loans before exploring other similar options. Between lower interest rates and substantially longer repayment terms, SBA loans tend to give you the funding you need without disrupting your cash flow.

There are only three types of financial institutions through which to apply for an SBA loan: commercial banks, credit unions or alternative business financing facilitators like CSB Capital Funding.

What makes an SBA Loan different from other business loans is the SBA guarantees up to 85% of loans up to $150,000 and up to 75% of loans over that amount up to $500,000.

How does SBA 7a Loan Work?

The application process tends to be a bit longer for SBA 7a business loans because of the added scrutiny of the SBA process. Typical turnaround is 15-30 days but can extended to 45-60 days in certain situations. This is a significantly shorter turnaround than commercial banks. Why? Because all CSB Capital Funding affiliates are delegated authorities of the SBA Preferred Lender Program (PLP). This means they can perform their own underwriting and make lending decisions without subsequent approval from the government SBA agency. This significantly reduces the approval process and turnaround time.

SBA 7a loans have better terms then other loan products. They typically require a minimum 10% capital injection by the borrower (although we do have lenders that will accept no down payment) and a good personal credit score.

You can access up to $5M, with repayment terms of up to 25 years and virtually no pre-payment restrictions (3 yrs only and flexibility even within those first 3 yrs), depending on the type of investment.

How can I use my SBA 7a Loan?

Business Growth

Buy new equipment or inventory, hire new staff, or prepare for seasonal changes.

Business Expenses

Get extra working capital to manage payroll, bridge gaps in cash flow, or pay bills.

Business Opportunities

Expand or open a second location, take on more clients, or capitalize on bulk order discounts.

Business Acquisitions

Is a competitor retiring and looking to relinquish their business? You can acquire that business with up to $2M towards “Goodwill”*

 


 

Small Business Administration loans can be used for “most” business purposes, including working capital, equipment, construction of buildings, purchasing land, and much more. You can’t use one for investment real estate (to sell or lease), refinance existing debt that would “expose the SBA to a loss,” pay delinquent taxes, or to relocate the borrower from a community where their departure would result in a significant increase in unemployment.

*Goodwill refers to the intangible asset that arises when someone purchases a business for more than the value of its tangible assets like real estate or equipment. Goodwill typically includes brand value, customer relationships, and employee relationships, as well as any patents, trademarks, and copyrights that a business has.

How Can I Qualify For a SBA 7a Loan?

If you’re looking to use an SBA loan for any purpose other than acquiring an existing business, here are the standard requirements:

  • 2+ years in business
  • $500,000+ in annual gross sales
  • 685+ credit score

 


 

If you’re looking to use an SBA loan to purchase an existing business, the requirements are:

  • 10% down payment
  • 680+ credit score
  • Industry/managerial experience
  • No criminal history (or the ability to explain misdemeanors on your record)
  • No current federal debt
  • If purchasing a franchise, a paid franchise fee

 


 

Your business, or the business you’re looking to purchase, must also fall within the SBA’s overarching eligibility criteria. Outside of the traditional minimum credit score, time in business, and annual gross sales requirements, your business (or the one you’re looking to purchase) must:

  • Operate for profit
  • Do business within the U.S. (or propose to)
  • Have “reasonable” owner equity to invest
  • Have sought out alternative resources, like personal savings and assets, before seeking assistance through the SBA

What Are The Advantages of a SBA 7a Loan?

  • Low rates
  • High borrowing limits
  • Long terms
  • No collateral requirement with business acquisition (i.e. 1st $2M of loan is un-collateralized)

What Are The Disadvantages of a SBA 7a Loan?

  • The approval process is longer
  • The paperwork involved is more tedious
  • Requirements may differ amongst lenders

Pros

Cons

How to Apply for a SBA 7a Loan?

Ensure you have a good credit score of 680+ and your cash flow is consistent especially over the past 90 days

Be prepared to discuss in detail the purpose of the funds as we will have to create a sufficiently compelling executive summary

For business acquisitions, we’ll need to provide the following:

  • Last THREE years of Personal Tax Returns from the prospective buyer of the business
  • Personal Financial Statement from the prospective buyer of the business
  • Borrower Resume
  • Last THREE years of Business Tax Returns from the business being purchased
  • Year-To-Date Financial Statement (balance sheet and P&L) less than 60 days old from the business being purchased
  • The letter of intent and/or purchase contract for the business acquisition OR an Executive Summary highlighting the total project costs of the business acquisition project being requested.

What If I am Declined for a SBA 7a Loan?

Do not be discouraged. We have other loan products that are more costly, but the turnaround time is significantly faster. Check out our home page for other lending products that might meet your needs or give us a call an we’ll offer some suggestions.

What is a SBA 7a Loan?

SBA 7a loans are backed by the government SBA (Small Business Association) agency for the purpose of financing US small businesses.

SBA loans are one of the most desirable and sought-after types of business loans. Many small business owners apply for SBA loans before exploring other similar options. Between lower interest rates and substantially longer repayment terms, SBA loans tend to give you the funding you need without disrupting your cash flow.

There are only three types of financial institutions through which to apply for an SBA loan: commercial banks, credit unions or alternative business financing facilitators like CSB Capital Funding.

What makes an SBA Loan different from other business loans is the SBA guarantees up to 85% of loans up to $150,000 and up to 75% of loans over that amount up to $500,000.

How does a SBA 7a Loan Work?

The application process tends to be a bit longer for SBA 7a business loans because of the added scrutiny of the SBA process. Typical turnaround is 15-30 days but can extended to 45-60 days in certain situations. This is a significantly shorter turnaround than commercial banks. Why? Because all CSB Capital Funding affiliates are delegated authorities of the SBA Preferred Lender Program (PLP). This means they can perform their own underwriting and make lending decisions without subsequent approval from the government SBA agency. This significantly reduces the approval process and turnaround time.

SBA 7a loans have better terms then other loan products. They typically require a minimum 10% capital injection by the borrower (although we do have lenders that will accept no down payment) and a good personal credit score.

You can access up to $5M, with repayment terms of up to 25 years and virtually no pre-payment restrictions (3 yrs only and flexibility even within those first 3 yrs), depending on the type of investment.

How can I use my SBA 7a Loan?

Business Growth

Buy new equipment or inventory, hire new staff, or prepare for seasonal changes.

 

Business Expenses

Get extra working capital to manage payroll, bridge gaps in cash flow, or pay bills.

 

Business Opportunities

Expand or open a second location, take on more clients, or capitalize on bulk order discounts.

 

Business Acquisitions

Is a competitor retiring and looking to relinquish their business? You can acquire that business with up to $2M towards “Goodwill”*

 


 

Small Business Administration loans can be used for “most” business purposes, including working capital, equipment, construction of buildings, purchasing land, and much more. You can’t use one for investment real estate (to sell or lease), refinance existing debt that would “expose the SBA to a loss,” pay delinquent taxes, or to relocate the borrower from a community where their departure would result in a significant increase in unemployment.

 

*Goodwill refers to the intangible asset that arises when someone purchases a business for more than the value of its tangible assets like real estate or equipment. Goodwill typically includes brand value, customer relationships, and employee relationships, as well as any patents, trademarks, and copyrights that a business has.

How can I qualify for a SBA 7a Loan?

If you’re looking to use an SBA loan for any purpose other than acquiring an existing business, here are the standard requirements:

  • 2+ years in business
  • $500,000+ in annual gross sales
  • 685+ credit score

 


 

If you’re looking to use an SBA loan to purchase an existing business, the requirements are:

  • 10% down payment
  • 680+ credit score
  • Industry/managerial experience
  • No criminal history (or the ability to explain misdemeanors on your record)
  • No current federal debt
  • If purchasing a franchise, a paid franchise fee

 


 

Your business, or the business you’re looking to purchase, must also fall within the SBA’s overarching eligibility criteria. Outside of the traditional minimum credit score, time in business, and annual gross sales requirements, your business (or the one you’re looking to purchase) must:

  • Operate for profit
  • Do business within the U.S. (or propose to)
  • Have “reasonable” owner equity to invest
  • Have sought out alternative resources, like personal savings and assets, before seeking assistance through the SBA

What are the advantages of a SBA 7a Loan?

  • Low rates
  • High borrowing limits
  • Long terms
  • No collateral requirement with business acquisition (i.e. 1st $2M of loan is un-collateralized)

What are the disadvantages of a SBA 7a Loan?

  • The approval process is longer
  • The paperwork involved is more tedious
  • Requirements may differ amongst lenders

Pros and Cons of SBA 7a Loans

Pros

Cons

How to apply for a SBA 7a Loan?

Ensure you have a good credit score of 680+ and your cash flow is consistent especially over the past 90 days

 

Be prepared to discuss in detail the purpose of the funds as we will have to create a sufficiently compelling executive summary

 

For business acquisitions, we’ll need to provide the following:

  • Last THREE years of Personal Tax Returns from the prospective buyer of the business
  • Personal Financial Statement from the prospective buyer of the business
  • Borrower Resume
  • Last THREE years of Business Tax Returns from the business being purchased
  • Year-To-Date Financial Statement (balance sheet and P&L) less than 60 days old from the business being purchased
  • The letter of intent and/or purchase contract for the business acquisition OR an Executive Summary highlighting the total project costs of the business acquisition project being requested.

What if I am declined for a SBA 7a Loan?

Do not be discouraged. We have other loan products that are more costly, but the turnaround time is significantly faster. Check out our home page for other lending products that might meet your needs or give us a call an we’ll offer some suggestions.

SBA 7a Loan Amount, Rate, Term and Time to Fund

Frequently Asked Questions

How does a SBA 7a Loan compare to other Small Business Loan options?

Financing TypeFinancing AmountInterest RateTermTime to Fund
Accounts Receivable Financing$10k – $10M (advance rate of up to 90%)1% – 2% p/mo3 months – 5 years1 – 3 business days
Business Line of Credit$5k – $1MStarting at 1% p/mo12 – 36 months7 – 14 days
Equipment Financing$10k – $25M1% – 2% p/mo12 – 72 months1 – 3 business days
SBA 7a Loan$350k – $5M9% – 12% fixed5 years – 25 years30 – 45 days
Supply Chain Financing$250k – $25M1% – 2% p/mo30 – 150 days (re-usable)2 – 3 weeks
Unsecured Business Line of Credit$5k – $100k1% – 2% p/mo1 – 2 years1 – 3 business days
SBA 7a Loan
Financing Amount$350k – $5M
Interest Rate9% – 12% fixed
Term5 years – 25 years
Time to Fund30 – 45 days
Accounts Receivable Financing
Financing Amount$10k – $10M (advance rate of up to 90%)
Interest Rate1% – 2% p/mo
Term3 months – 5 years
Time to Fund1 – 3 business days
Business Line of Credit
Financing Amount$5k – $1M
Interest RateStarting at 1% p/mo
Term12 – 36 months
Time to Fund7 – 14 days
Equipment Financing
Financing Amount$10k – $25M
Interest Rate1% – 2% p/mo
Term12 – 72 months
Time to Fund1 – 3 business days
Supply Chain Financing
Financing Amount$250k – $25M
Interest Rate1% – 2% p/mo
Term30 – 150 days (re-usable)
Time to Fund2 – 3 weeks
Unsecured Business Line of Credit
Financing Amount$5k – $100k
Interest Rate1% – 2% p/mo
Term1 – 2 years
Time to Fund1 – 3 business days

Can I use an SBA loan for non-profit purposes?

No

How long does SBA loan approval take?

Through CBS Capital Funding in as little as 3-5 weeks. If you go through a commercial bank or credit union the process normally takes 4-6 months.

How much cash flow am I expected to have?

Your Debt Service Coverage Ratio (DSCR) for the current year should be 1.25x. This means the revenue of your business should be 1.25x your outstanding debt or higher.

Are there loan covenants to consider?

Most banks require a 1.25 DSCR covenant. As an example, if you take out a $1M SBA loan with a bank, your are expected to make 1.25x the cost of the loan in revenue every year. If you fall below that amount, the bank has the right to recall the loan even if you’ve never missed a payment!

 

At CSB Capital Funding, our SBA loans have no such loan covenants.

Ready to take the next step and apply for a SBA 7a Loan?

Free Consultation – No Obligation

Give us a call to see how we can help your business