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types of loans
SBA 504
SBA 7(a)
USDA
Conventional, Non-Guaranteed Loan
tools
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SBA 7(a) Loans
7(a) loans are the most basic
and most used type loan of SBA’s business loan programs.
7(a) loans are only available on
a guaranty basis. This means they are provided by lenders who choose
to structure their own loans by SBA’s requirements and who apply
and receive a guaranty from SBA on a portion of this loan. The
SBA does not fully guaranty 7(a) loans. The lender and SBA share
the risk that a borrower will not be able to repay the loan in
full. The guaranty is a guaranty against payment default. It does
not cover imprudent decisions by the lender or misrepresentation
by the borrower.
All 7(a) loans which SBA guaranty must meet 7(a)
criteria. Once your business gets a loan from its lender with a
7(a) structure, NYBDC gets an SBA guaranty on a portion or percentage
of this loan. Hence the primary business loan assistance program
available to small business from the SBA is called the 7(a) guaranty
loan program.
In order to get a 7(a) loan, the applicant must first
be eligible. Repayment ability from the cash flow of the business
is a primary consideration in the SBA loan decision process but
good character, management capability, collateral, and owner's
equity contribution are also important considerations. All owners
of 20 percent or more are required to personally guarantee SBA
loans.
Eligibility Criteria:
All applicants must be eligible
to be considered for a 7(a) loan. The eligibility requirements
are designed to be as broad as possible in order that this lending
program can accommodate the most diverse variety of small business
financing needs. All businesses that are considered for financing
under SBA’s
7(a) loan program must: meet SBA size standards, be for-profit,
not already have the internal resources (business or personal)
to provide the financing, and be able to demonstrate repayment.
Certain variations of SBA’s 7(a) loan program may also require
additional eligibility criteria. Special purpose programs will
identify those additional criteria.
Eligibility factors for all
7(a) loans include: size, type of business, use of proceeds, and
the availability of funds from other sources
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