How to apply for an SBA 7(a) Loan
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Only U.S.-Based Businesses are Eligible.
An SBA loan is a small business loan offered by banks and lenders and partly guaranteed by the U.S. Small Business Administration. SBA loans have tight lending standards and requirements. However, their highly flexible rates and terms can make them one of the best ways to finance your business.
The SBA offers a variety of loan programs, including 7(a), 504, micro, disaster, and more. This section will highlight how your small business can apply for 7(a) funding.
- Program: SBA 7(a)
- Loan Size: Up to $5 million
- Purpose: Working capital, expansion, and equipment purchases
The 7(a) loan is SBA's primary program for providing funding to small businesses. With access to up to $5 million in working capital for a 25-year term, numerous industries find that these types of loans are undoubtedly adequate for their needs. Most businesses that apply for an SBA loan will fall under the 7(a) category.
Interest rates tend to be between 10-12% as of December 2022, depending on the loan amount, credit rating, and the nature of your business. See more rate details below.
| SBA loan size | 7(a) loan paid off in under 7 years | 7(a) loan paid off in over 7 years |
|---|---|---|
| $25,000 or less | 11.75% | 12.25% |
| $25,001 - $50,000 | 10.75% | 11.25% |
| More than $50,000 | 9.75% | 10.25% |
Source: U.S. Small Business Administration
Standard SBA Loan Application Requirements
To submit your SBA loan application, you'll be asked to provide extensive documentation. Some of these requirements will vary based on your lender and loan program, but here are the most common documents and forms you'll need to provide:
- SBA Form 1919, Borrower Information Form.
- SBA Form 912, Statement of Personal History.
- Personal financial statement (you can use SBA Form 413).
- SBA Form 148, Unconditional Guarantee (or the lender's equivalent). The SBA requires that anyone with 20% or more ownership in the business provide an unlimited personal guarantee. Owners with less than 20% ownership may provide a full or limited guarantee (SBA Form 148L).
- Business financial statements, such as income statements, balance sheets, and cash flow projections.
- Income tax returns.
- Detailed schedule of collateral.
- Existing debt schedule, if applicable.
- Business certificates or licenses.
- Loan application history.
- Resumés for each business owner.
- Business overview and history.
- Business lease.
If you are using your SBA loan to buy an existing business or real estate, you'll have additional application requirements, such as purchase agreements and appraisals or business valuations.
See Your Loan Options
Only U.S.-Based Businesses are Eligible.
SBA 7(a) Loan Application Requirements
Some SBA loan programs have unique requirements. The SBA 7(a) loan program covers several different loan types. Requirements are fairly standard across 7(a) loans, with some exceptions. For example, SBA CAPLines of credit must be used for short-term or seasonal working capital needs.
There are four types of credit lines: Seasonal CAPLine, Contract CAPLine, Builders CAPLine, and Working CAPLine. Borrowers must meet requirements related to the use of proceeds (e.g., be able to show a pattern of seasonal activity) in addition to the standard 7(a) requirements.
Need Help Applying for an SBA Loan?
At First Union, we want to make the process as easy as we possibly can. Because we have worked with many SBA loan applicants, our loan specialists understand precisely what needs to be done and how we can get you qualified. Fill out our online form or call us at 863-825-5626 today to explore your options.
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