SBA 7(a) Loan Program

The 7(a) Guaranty Program is the SBA's primary loan program. The SBA reduces risk to lenders by guaranteeing major portions of loans made to small businesses. This enables the lenders to provide financing to small businesses when funding is otherwise unavailable on reasonable terms. By providing loan guarantees, the SBA is able to help tens of thousands of small businesses every year get financing they would not otherwise obtain. If you are interested in discussing a 7(a) loan, contact Jon Ecker at Mo-Kan.

Use of Proceeds
You can use a 7(a) loan to:

• Expand or renovate facilities
• Purchase machinery, equipment, fixtures, and leasehold improvements
• Finance receivables and augment working capital
• Refinance existing debt with compelling reason
• Finance season lines of credit
• Construct commercial buildings
• Purchase land or buildings

Terms & Interest Rates
The length of time for repayment depends on the use of the proceeds and the ability of your business to repay; usually five to 10 years for working capital and up to 25 years for fixed assets such as the purchase or major renovation of real estate or purchase of equipment .

Both fixed and variable interest rates are available. Rates are pegged at no more than 2.25% over the lowest prime rate for loans with maturities of less than seven years and up to 2.75% for seven years or longer. For loans under $50,000, rates may be slightly higher.

What the SBA Looks For:

• Good character
• Management expertise and commitment neccessary for success
• Sufficient funds, including the SBA guaranteed loan, to operate the business on a sound financial basis (for new businesses, this includes the resources to meet start-up expenses and the initial operating base)
• Feasible business plan
• Adequate equity or investment in the business
• Sufficient collateral
• Ability to repay the loan on time from the projected operating cash flow