{"id":12496,"date":"2024-08-02T14:43:20","date_gmt":"2024-08-02T21:43:20","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=12496"},"modified":"2025-10-22T11:22:59","modified_gmt":"2025-10-22T18:22:59","slug":"guide-to-the-sbas-general-7a-business-loan-program","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/guide-to-the-sbas-general-7a-business-loan-program\/","title":{"rendered":"Guide to the SBA&#8217;s General 7(a) Business Loan Program"},"content":{"rendered":"<div class=\"co-flex_row co-flex_row__blue co-flex_row__long-form-text co-flex_row__next_row__blog-contributors\" >\n\t<div class=\"co-flex_row--row co-row\">\n\t\t\t<div class=\"co-long_form\">\n\t\t\t\t\t<div class=\"co-long_form--block co-long_form--block__nomedia prow items-start \">\n\t\t\t\t<div class=\"co-long_form--text pcol-md:8\">\n\t\t\t\t\t<div class=\"co-long_form--content\"><h2>Guide to the SBA&#8217;s General 7(a) Business Loan Program<\/h2>\n<p>The 7(a) loan is the most common of all the SBA\u2019s loan programs as it can be used for a variety of business purposes, including short- and long-term working capital, purchasing real estate or machinery, business start-up and growth, and buying a business, to name just a few.<\/p>\n<p>It\u2019s because of its flexibility and wide range of business reasons that this loan is the most popular. A business can borrow up to $5 million and the SBA will guarantee up to 85% to the lender.<\/p>\n<p>It\u2019s important to remember that you\u2019re not borrowing from the SBA itself. The funds are still coming from your financial institution, but\u2005the\u2005SBA\u2005will\u2005guarantee\u2005a\u2005certain\u2005amount\u2005of\u2005the\u2005loan\u2005to\u2005the\u2005lender.<\/p>\n<h3>Eligibility<\/h3>\n<p>The key factors are based on what your business does to make money, the character of the business ownership and where it\u2019s located.<\/p>\n<p>Although the SBA will look at each business on a case-by-case basis, and given that you still need to meet your financial institutions requirements for a SBA-guaranteed loan, there are some elements that are common for all applicants, and they include:<\/p>\n<ul>\n<li>The business must operate for profit.<\/li>\n<li>Be defined as \u2018small\u2019 by the SBA.<\/li>\n<li>Have reasonable equity invested.<\/li>\n<li>Have used alternatives to borrowing, such as personal assets.<\/li>\n<li>Demonstrated a legitimate need for the funds.<\/li>\n<\/ul>\n<h3>Reasons for the Loan<\/h3>\n<p>Short and long-term working capital needs are among the most common,\u00a0including:<\/p>\n<ul>\n<li>Acquiring, refinancing, or improving real estate and buildings.<\/li>\n<li>Refinancing current business debt.<\/li>\n<li>Purchasing and installation of machinery and equipment,\u00a0including AI-related expenses.<\/li>\n<li>Purchasing furniture, fixtures, and supplies.<\/li>\n<li>Changes of ownership (complete or partial).<\/li>\n<\/ul>\n<p>The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.<\/p>\n<p>Because the SBA has specific purposes in mind, they also have some that mean you won\u2019t qualify for the loan. For example, you won\u2019t qualify if you\u2019re planning to refinance the kind of debt that means the SBA would be in a position to take on that debt if you fail.<\/p>\n<p>You also can\u2019t use the funds to repay delinquent state or federal taxes \u2013 or any other kind of government debt for that matter.<\/p>\n<p><a href=\"https:\/\/www.soundcu.com\/business\/loans\/#contact\">Talk to us.<\/a> As an approved SBA lender, we\u2019ll explain what constitutes a sound business reason.<\/p>\n<h3>Ineligible businesses<\/h3>\n<p>There are certain kinds of businesses that the SBA views as ineligible for their 7(a) loan program. For instance, if you\u2019re in the business of lending money yourself like a pawn shop then you won\u2019t qualify for a SBA loan. The same is true if your business is focused on religion or politics, or if you as the owner are currently incarcerated, on parole or probation, or have been named as the defendant in criminal proceedings.<\/p>\n<p>The SBA takes a very dim view of those with criminal histories, and anyone who\u2019s habitually delinquent with debts or who\u2019s been repeatedly turned down for loans in the past. If this sounds like you, your chances of obtaining an SBA loan are pretty slim.<\/p>\n<h3>The Application Process<\/h3>\n<p>There\u2019s no getting around it \u2013 you need to be prepared for paperwork. Although the SBA is streamlining their application process, it can still take some time.<\/p>\n<p>There\u2019s a fair amount of documentation you\u2019ll need to provide. In order to be as prepared as possible, the <a href=\"https:\/\/www.sba.gov\/sites\/default\/files\/2022-08\/7a_Loan_Submission_Checklist_v_2.0.pdf\" rel=\"noopener\">SBA have put together a checklist<\/a>. It\u2019s vital that you review this and gather all the documentation required, then go through the checklist with your bank to make sure you haven\u2019t missed anything.<\/p>\n<p>The documentation also includes several forms you\u2019ll need to fill out. Mostly what they\u2019re looking for are details around your personal background and financial statements. When it comes to the latter, it\u2019s a good idea to fill those forms out with your bank manager or accountant.<\/p>\n<p>Work with your lender to understand the process.<\/p>\n<h3>Repayment Terms<\/h3>\n<p>Depending on what the loan is for, there are some maximum maturities:<\/p>\n<ul>\n<li>Real estate \u2013 25 years.<\/li>\n<li>Equipment \u2013 10 years.<\/li>\n<li>Working capital \u2013 7 years.<\/li>\n<\/ul>\n<p>Like most bank loans, you make repayments on the principal and interest on a monthly basis. You may be able to negotiate interest-only terms during your business\u2019s start-up and expansion phases.<\/p>\n<p>The expectation is that every 7(a) loan is fully secured, but the SBA won\u2019t necessarily turn you down if you don\u2019t have enough collateral. If all other aspects of your application are in order, they\u2019ll generally ask that you pledge all the collateral you have available.<\/p>\n<h3>Next Steps<\/h3>\n<p>The spectrum of what businesses are eligible and what they can use the loan for, is quite wide, which means that many small businesses qualify. It\u2019s also why it\u2019s the most commonly used loan program, and it functions very much along the same lines as a traditional loan.<\/p>\n<p>If you\u2019re looking for a loan to help you finance start-up or expansion, or you\u2019re looking to increase your working capital, purchase real estate or equipment, then the 7(a) loan is your best bet. Confirm this with your lender and work with through your eligibility and the application process with them.<\/p>\n<p><a href=\"https:\/\/www.soundcu.com\/business\/loans\/#contact\">Contact Sound<\/a> for help with your SBA loan.<\/p>\n<\/div>\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\n\t<\/div>\n<\/div>\n\n\n<div class=\"co-flex_row co-flex_row__last co-flex_row__blog-contributors\" >\n\t<div class=\"co-flex_row--row co-row\">\n\t\t\t<div class=\"co-blog_contributors\">\n\t\t\t\t\t<div class=\"co-blog_contributor\">\n\t\t\t\t<div class=\"co-blog_contributor--img_wrap\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"300\" src=\"https:\/\/www.soundcu.com\/files\/DeterCory_Bio_300x300.jpg\" class=\"co-blog_contributor--img\" alt=\"Cory Deter Sound Credit Union VP Business Lending\" srcset=\"https:\/\/www.soundcu.com\/files\/DeterCory_Bio_300x300.jpg 300w, https:\/\/www.soundcu.com\/files\/DeterCory_Bio_300x300-150x150.jpg 150w, https:\/\/www.soundcu.com\/files\/DeterCory_Bio_300x300-75x75.jpg 75w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/div>\t\t\t\t<div class=\"co-blog_contributor--content\">\n\t\t\t\t\t<h3 class=\"co-blog_contributor--name\">Cory Deter<\/h3><div class=\"co-blog_contributor--title\">VP Business Lending<\/div><div class=\"co-blog_contributor--bio text-component\"><p>Cory Deter serves as the Vice President of Business Lending at Sound Credit Union, bringing 20 years of experience in business lending to his role. He holds a Master&#8217;s in Business Administration and is a graduate of the Pacific Coast Banking School. In this position, Cory oversees the Business Lending Department, playing a pivotal role in managing business loan production and commercial credit risk, which ensures the success of the credit union\u2019s lending initiatives. He is dedicated to developing and mentoring his team to achieve excellence in service delivery and is passionate about fostering relationships with business members, helping them navigate their financial needs.<\/p>\n<\/div>\t\t\t\t\t\t<div class=\"co-blog_contributor--social\">\n\t\t\t\t\t\t\t<span>Connect<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.linkedin.com\/in\/cory-deter-mba-45936510\/\" class=\"co-social_share--link\" target=\"_blank\" rel=\"noopener noreferrer\" aria-label=\"LinkedIn\">\n\t\t\t\t\t\t\t\t\t<svg class=\"icon-svg\" viewBox=\"0 0 24 24\" role=\"img\" aria-label=\"Icon LinkedIn\">\n\t\t\t\t\t\t\t\t\t\t<use xlink:href=\"https:\/\/www.soundcu.com\/wp-content\/themes\/soundcu-theme\/images\/sprite-icons.svg#linkedin\" \/>\n\t\t\t\t\t\t\t\t\t<\/svg>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Looking for business funding? The SBA 7(a) loan offers up to $5 million for various needs, with the SBA guaranteeing up to 85%. Your lender provides the funds, and the SBA backs it. Check your eligibility and start your application today! <a href=\"https:\/\/www.soundcu.com\/blog\/guide-to-the-sbas-general-7a-business-loan-program\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":12446,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_searchwp_excluded":"","footnotes":""},"categories":[49],"tags":[66,67],"class_list":["post-12496","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-commercial","tag-business-loans","tag-sba"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/12496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/comments?post=12496"}],"version-history":[{"count":8,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/12496\/revisions"}],"predecessor-version":[{"id":17325,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/12496\/revisions\/17325"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media\/12446"}],"wp:attachment":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media?parent=12496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/categories?post=12496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/tags?post=12496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}