SBA 7A Guaranty Loan
The purpose of this program is to provide flexible financing to small businesses for development and growth when conventional financing is not available.
SBA Service Area: Georgia, South Carolina, Florida
Cash/Equity Injection
The cash or equity injection of the company may vary from 10% to 50%, depending on the collateral pledged to secure the loan, the viability of the project, and the profitability of the company. SBA generally will not provide 100% financing for an applicant.
Maximum Loan Amount
The maximum loan amount is $5,000,000. The maximum guaranty is 75% ($3,750,000) for loans over $150K. For loans under $150K, the guaranty is 85%.
Rate/Term
The funding bank determines the interest rate and term.
The maximum variable interest rate for loans maturing in less than 7 years cannot exceed 2.25% above Wall Street Journal Prime. For loans maturing in 7years or more, the maximum interest rate cannot exceed 2.75% above WSJP.
The maximum fixed interest rate a lender may charge is published in the in the Federal Register periodically.
Eligible Uses of Proceeds
- Acquisition of land
- Construction of new building
- Purchase of existing building
- Renovation of existing structure
- Machinery & Equipment
- Professional Fees (survey, appraisal, environmental, architect, etc)
- Signage
- Construction fee/Interim Interest
- Working Capital
- Inventory
- Refinancing (must show at least a 10% improvement in cash flow)
Types of Eligible Businesses
- For-Profit
- Owner must be a legal, U.S. resident
- Owner-occupied (borrower must occupy at least 51% of existing building and at least 60% of “new” building)
Benefits to Borrower
- Reduced cash/equity injection
- Longer Repayment Terms
- SBA guaranty encourages the bank to approve the loan request
- Application is prepared by CADDA
- Community benefits from the economic activity
Benefits to Bank
- Customer base is increased
- CRA requirements are satisfied
- Credit risk is reduced
- Bank is allowed to determine its interest rate
- Loan may be eligible to be sold in secondary market
- Minimal paperwork. (CADDA prepares the application; Bank provides commitment letter)
Fees
| Maturity Length and Size of Guaranteed Portion | Fee Measures as Percentage of Guaranteed Portion | When Payable | Lender May Get Fee From Borrower | When SBA Refunds Fee From Borrower |
| 12 Months or less | 0.25% | With GuaranteeaApplications | When SBA Approves Loan | If Application Withdrawn or Denied (1) |
| More Than 12 months And Total Guaranteed PortionIs $150,000 or Less | 2.0% (Lender may retain 25%of this fee) | Within 90 Days of SBA Approval | After First Disbursement | If Loan Canceled and Never Disbursed |
| More Than 12 Months And Amount of Guaranteed Portion of Loan is Between $150,000 and $700,000 | 3.0% | Within 90 Days of SBA Approval | After First Disbursement | If Loan Canceled and Never Disbursed |
| More Than 12 Months And Amount of Guaranteed Portion of Loan Exceeds $700,000 | 3.5% | Within 90 Days of SBA Approval | After First Disbursement | If Loan Canceled and Never Disbursed |
| More Than 12 Months And Amount of Guaranteed Portion of Loan Exceeds $1,000,000 | 3.75% | Within 90 Days of SBA Approval | After First Disbursement | If Loan Canceled and Never Disbursed |