SBA Lending: 7A and 7A Express

If an SBA loan is the ideal funding solution for you, we’ll guide you every step of the way – offering the expertise you need to take the pain and worry out of the process while helping you make the absolute right financial decision

Let's get started.

SBA LOAN TERMS

⇒ Loan Amounts

Up to $5,000,000

⇒ Loan Term:

10-30 years

⇒ Time To Fund:

1-2 months after approval

⇒ Interest rates:

Prime +

HELPING YOU NAVIGATE THE COMPLEX SBA LOAN PROCESS

The U.S. Small Business Administration is often a great ally for entrepreneurs and small businesses. But did you know that the SBA may recommend that your business try to qualify for a conventional loan first before turning to the SBA and its guaranteed loan products? Many small businesses don’t realize this and understandably so. You’re busy running your operation, getting new clients and growing your business, not becoming an SBA expert.

That’s where Business Capital Consultants comes in. Not only are we experts at understanding the various types of SBA loans available for different types of small businesses, we help you determine whether an SBA loan is the best option for you. Because there are a variety of stipulations associated with obtaining an SBA loan,  Business Capital Consultants work to understand your overall financial situation and whether it fits within the SBA framework. We then help you navigate the complex SBA loan application process in a way that can help speed up the decision and get your business the funding it needs fast.

While the SBA offers up to 12 different types of loan products, there are 2 types of SBA loans that work for the majority of companies we work with.

SBA Loan Programs

  • The SBA’s most common loan program, the 7(a) loan offers a maximum amount of $5 million. It’s ideal for business startups as well as established businesses to meet short and long-term needs, such as working capital, equipment purchases and inventory. Business Capital Consultants has over 40 nationwide preferred lender provider banks we work with and can close fully underwritten loans in 30 days or less.
  • With a maximum loan amount of $350,000 and an SBA guarantee of up to 50% of the loan, the SBA Express can be configured as a revolving line of credit or long-term loan. Express also features fast approval and turnaround, often within 36 hours. Furthermore, lenders and borrowers may negotiate the interest rate, as long as it does not exceed the SBA maximum. Business Capital Consultants can assist your business with this loan’s fast turnaround and streamlined application process.

The SBA’s 7(a) small loans are any 7(a) loans of $350,000 or less. The primary difference here is collateral. Normal 7(a) loans require lenders to take as much collateral as possible to cover the loan. For 7(a) small loans, the lender must only follow its own collateral policies and procedures for non-SBA loans of similar sizes. 

If your business exports products to other countries, Export Express loans offer you a fast method to get SBA-backed funding up to $500,000 in order to support those operations. Lenders have the ultimate say in whether or not you’ll be approved for an Export Express loan. You can usually get approved for an Export Express Loan with 24-36 hours.

Export Working Capital loans are essentially larger versions of Export Express Loans, but they’re tailored to meet your working capital needs. You can borrow up to $5 million in Export Working Capital loans. Unlike Export Express Loans, the SBA must approve your Export Working Capital loan. Additionally, your export-related inventory and receivables serve as collateral for this type of loan. Lastly, owners with 20% or more of an ownership stake in the business must sign a personal guarantee.

International Trade loans are a long-term financing vehicle for businesses whose export sales are causing them to expand. They’re also designed for businesses whose operations have been hurt by imports and need to modernize to stay competitive. The SBA offers International Trade loans up to $5 million. Term lengths can be up to 10 years for permanent working capital, 10 years for machinery and equipment (up to 15 years if the useful life is longer than 10 years), and 25 years for real estate.

The SBA can designate lenders as Preferred Lenders. These lenders can approve SBA loan applications themselves, instead of sending them to the SBA like nonpreferred lenders have to — meaning faster turnaround times for you. Additionally, SBA loans from Preferred Lenders tend to have favorable interest rates, longer repayment terms, and no prepayment penalties. Business Capital Consultants can find a Preferred Lender for you so you can reap the benefits of an SBA loan without waiting too long.

Small businesses in which 51% of the owners are veterans of the US Armed Forces can take of Veterans Advantage loans. These reduce upfront guarantee fees for veteran entrepreneurs. Amounts up to $150,000 have no guarantee fees. Loans from $150,001 to $500,000 have a 1.5% guarantee fee for a maturity longer than 12 months, and a 0.125% guarantee fee for less than 12 months. After that, fees never exceed 3.75%.

CAPLines is an overarching program (consisting of 4 CAPLines) that assists businesses with short-term and cyclical working capital solutions. Seasonal CAPLines are meant to help businesses in seasonal industries, such as lawn care, finance their seasonal operations. They can either revolving or non-revolving lines of credit, and they go up to $5 million. Seasonal CAPLines must be used to finance seasonal increases in accounts receivable, inventory, or labor costs — they can’t be used to maintain working capital during the slow season.

Contract CAPLines are lines of credit that companies can use to cover their direct materials and labor costs that are associated with assignable contracts. These CAPLines can be either revolving or non-revolving, and the amount you can borrow goes up to $5 million. Businesses must have proven experience, profitability, and the ability to complete any contracts, subcontracts, or purchase orders in order to qualify for a Contract CAPLine.

Builders CAPLines are revolving or non-revolving designed for construction contractors, home builders, and similar businesses. These businesses can use their Builders CAPLine (which can be up to $5 million) to finance direct materials and labor costs associated with constructing, rehabbing, or renovating commercial or residential buildings. The Builders CAPLine is secured by the building the company is working on. Businesses must have proven experience, profitability, and ability to successfully complete projects on time.

Working CAPLines are revolving lines of credit up to $5 million set aside for businesses that can’t meet underwriting standards for most forms of long-term credit. You can use a Working CAPLines to finance recurring/short-tem needs, cyclical growth, and similar working capital needs. To repay a Working CAPLine, you convert short-term assets (such as accounts receivable or inventory) into cash, then remit that cash to your lender. Lenders may charge additional fees on your Working CAPLine.

Business Capital Consultants is here to help if you aren’t sure which short-term financing source is right for you. We’ll deal with the paperwork and phone calls for you so you can get the funding you need without wasting valuable time.

What Worries You?

Qualification
Worried about whether you not you qualify for an SBA loan?
Application Process
Concerned that you may not understand the application process?
Debts
Apprehensive about taking on too much debt?
Type of Loan
Struggling to understand which type of loan is best for your business?

Don't Worry

You don’t have to worry about any of these things. Let  Business Capital Consultants analyze your business’s financial picture, understand your overall business objective, know where you want to be in the future and help you determine how best to get there. If an SBA loan is the ideal funding solution for you, we’ll guide you every step of the way – offering the expertise you need to take the pain and worry out of the process while helping you make the absolute right financial decision.

The Pros and Cons of SBA Loans

Small Business Administration (SBA loans) are loans backed by the Small Business Administration. The SBA doesn’t lend the money; banks and other lenders do that. The SBA simply guarantees a large portion of each loan to reduce the lender’s risk.

 

Types of SBA Loans

There are several SBA loan types.

  • SBA 7(a): The main type of SBA loan. You can borrow up to $5 million in 7(a) loans.
  • SBA Express: A smaller 7(a) loan with a faster approval process.
  • SBA 504: Designed for acquiring fixed assets.
  • CAPLines: An SBA line of credit. There are several types of CAPLines, each for a different purpose.
  • Export Working Capital: Used to fund operations related to export sales.
  • Export Express: A faster turnaround version of the Export Working Capital loan.
  • Microloans: Small loans designed for sm

When you’re busy running your business, it’s hard to find time to learn the intricacies of each SBA loan type. Business Capital Consultants can handle this for you. We can educate you on your loan options and find the best one for your business.

With that said, here are the general benefits and drawbacks of getting a loan backed by the SBA.

The Pros of SBA Loans

  • Broad Requirements

Barring specific types of SBA loans — such as the export-related funding vehicles — SBA loans have broad requirements. Of course, lenders have their own criteria that may be more stringent.

  • Easier to Qualify For Than Term Loans

Younger businesses often struggle to get term loans, as term lenders ask for several years of credit history and tax returns. The SBA’s guarantee cuts the lender’s risk, so the lender may consider businesses with shorter histories.

  • Loan Types

The SBA offers several types of loans, from their standard 7(a) to 

  • Loan Amounts Offered

The SBA offers up to $5 million, depending on the type of loan you choose.

  • Interest Rates

Thanks to the guarantee, SBA loans come with capped interest rates. The SBA sets a base rate, then provides a spread within which the lender can add to the base rate. This prevents the lender from offering you too high of an interest rate.

  • Helpful Resources

The SBA partners with Small Business Development Centers all over the US. These SBDCs offer small business owners affordable training and consulting on various aspects of starting and growing a business.

  • Assistance For Business Owners in Underserved Communities

The SBA doesn’t offer loans specifically for minority-owned and women-owned businesses. However, the SBA 8(a) Business Development Program makes it easier for these businesses to qualify for existing SBA loan products. 

The 8(a) program provides other benefits to minority-owned and women-owned businesses as well:

  • Assistance with finding and landing government contracts
  • Pairing newer companies with more established enterprise through a mentor-protege program
  • Help with management, training, and marketing

The Cons of SBA Loans

  • Credit Requirements

Although standard 7(a) loans have broad requirements, the SBA demands that you have a high credit score. If your credit score isn’t great, Business Capital Consultants is happy to help you find a more accessible funding source.

  • Personal Guarantee

Any business owner with a 20% or larger share of the business must provide an unlimited personal guarantee. If the business is unable to pay the loan back, these owners must use their personal assets to cover the debt. 

  • Collateral

The SBA requires lenders to take collateral on certain loans, such as 7(a) loans exceeding $350,000. 

  • Processing Times

Standard 7(a) loans can take weeks to process, as the SBA has to approve the guarantee for the lender. Express loans don’t take as long, but interest rates are higher, and borrowing amounts are lower.

In either case, Business Capital Consultants can help you choose which type of SBA loan works for you. If that means an SBA loan, we’ll handle the application and correspondence so you can keep working on your business while you wait.

Is an SBA Loan Right For You?

Many entrepreneurs could benefit from an SBA loan, but they don’t know which one to choose. Beyond that, they may not understand the application process.

Business Capital Consultants is here to help you find the best SBA loan. We’ll help you understand your options and handle the application process for you. Schedule your free consultation with Business Capital Consultants today.

Business Capital Consultants is here to help if you aren’t sure which short-term financing source is right for you. We’ll deal with the paperwork and phone calls for you so you can get the funding you need without wasting valuable time.

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