The SBA 7(a) loan program can be used to purchase, build, rehab or refinance real estate. These adjustable rate loans are fully amortized over 25 years.

With this program you do not actually borrow money from the SBA, but from a bank or finance company. The SBA offers a “guarantee” – an insurance policy of sorts – to the lender. If a borrower defaults on the loan, the SBA will cover up to 75% of the lender’s net loss. Because of the government guarantee, lenders have less risk, so they offer financing at lower rates and require less money down.

Lenders make a lot of money from these loans because they can sell the guaranteed portion in the secondary market just like a government bond.

Rates. Most SBA 7(a) loans adjust monthly or quarterly based on Prime rate. The spread over Prime does differ from one bank to another. At one bank you might get a rate of Prime + 0.50%, while another bank might offer you Prime + 2.75%. Our job at HBS Finance is to search among the dozens of SBA lenders to find the one that will offer you the best possible rate.

Points. Banks are not allowed by the SBA to charge any points on these loans. The SBA, however, does charge their own “guarantee fee” based on the amount of the guarantee they are giving to the bank. This fee ranges depending on the size of the loan, but generally amounts to approximately 2.25% of the loan amount.

The largest 7(a) loan allowed is $5,000,000

Leverage. The typical 7(a) real estate loan requires only 10% down.

SBA 7(a) Loan Program Loan Types
– Commercial Real Estate (Purchase and Refinance)
– Business Acquisition
– Debt Refinance
– Working Capital
– Inventory
– Partner Buyouts
– Machinery and Equipment
– Franchises

TYPES OF PROPERTIES:
*Dentist offices/Doctors office
*Flagged Hotels & Motels
*Gas Stations w/Convenience Store
*Single Tenant
*Beauty Salons/Barber Shops
*Restaurants/Bars
*Liquor Stores/Mini-Markets
*Veterinary Services
*Automotive Related
*Child Day Care Centers
*Office, retail & industrial (including condo)
*Self Storage, Laundromat & Dry Cleaners
*Grocery Stores, convenience stores
*Retail Stores
and many more property types.

Non-real estate loans. One of the benefits of SBA 7(a) loans is their flexibility to finance things other than real estate. For example, if you are buying a building and the business in it, you can do this with one SBA 7(a) loan. If you are buying a larger building and need some machines for the warehouse, you can finance them with one loan as well. Loan terms will be slightly different when non-real estate items are included, but the loans are still very favorable.

To obtain these loans you must meet the SBA eligibility rules and you must qualify.

Let us put our experience and expertise to work for you. Call us (310) 356-6500