SBA 7a Loans: Best Post-PPP Option?
Paycheck Protection Program loans (or PPP loans) are now a thing of the past. The Application deadline was May 31st, 2021. This means the options that small businesses have in order to fight their way through the coronavirus are now more limited.
Some businesses are already worried about which, if any loan program they should opt for. What are the best options now that the PPP option has already ended? Don’t worry! We got the great alternative for post PPP blues!
The Small Business Administration (or SBA) has been a go-to loan source to many small businesses for years. It might just be the case that the SBA 7(a) loans are the next-best-option as PPP has now come to a halt.
What Are PPP Loans?
The Paycheck Protection Program was a $953-billion business loan program established by the United States federal government in 2020 through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers.
What Are SBA 7(a) Loans?
The SBA 7(a) loan program is the Small Business Administration’s SBA flagship loan guarantee program. This program is designed with the purpose to give credit-worthy small business access to financing and capital expansion when potentially otherwise unattainable.
The SBA 7(a) program is very flexible and can be used to finance not only small businesses, but start-up businesses as well.
The proceeds of a 7(a) guaranteed loan may be used to purchase a wide range of business assets such as machinery, fixtures, and supplies, and can be used for improvements to land and buildings.
The loans can also serve the purpose of financing account receivables and augment working capital in the processes of getting paid by customers.
SBA 7(a) loan funds can be used to not only run, but start and purchase businesses! Lastly, 7(a) loans can also be sure for consolidating business debt, the owners may have with multiple lenders or at a high interest rate (under certain conditions).
More on the SBA 7(a) Loan Program
How Much Can You Get With 7(a)?
SBA 7a loans are for a maximum of $5 million, with SBA loan guarantee 85% for loans up to $150,000 and 75% for loans greater than $150,000. The terms of SBA 7a loans are 25 years for real estate and equipment and 10 years for working capital. Interest rates are based on the prime rate, the size of the loan, and the maturity of the loan.
Additional SBA 7(a) Benefits
The 7(a) Program offers flexibility, longer terms and potentially lower down payments compared to other financing options. There are also specialized programs for individuals interested in exporting; those located in underserved communities; members of the military community; and small businesses owners looking to meet their short-term and cyclical working capital needs.
7(a) Repayment Terms
Most 7(a) term loans are repaid with monthly payments of principal and interest. For fixed-rate loans, the payments stay the same because the interest rate is constant. For variable-rate loans, the lender can require a different payment amount when the interest rate changes.
Apply for an SBA 7(a) Loan
SBA 7(a) Loan Program Required Documents
There is a checklist to get your loan approved by SBA!
- SBA information form of the borrower fully filled
- Personal history statement
- Business license
- Lease papers
- History of previous loan applications
- Financial statements
- Income tax returns
- Tax return of your business
Need help assembling these documents? BitX Funding is here to help!
Contact BitX Funding to Apply for an SBA 7(a) Loan
At BitX Funding we provide small business loans where lenders compete for your business — although the APR on the financing we offer is typically higher than the SBA’s rate, we have viable loan options for women entrepreneurs looking to build a stronger small business.
Call us at 800-824-2407 or email us directly as firstname.lastname@example.org!
Ready to start the process even faster? Fill out the short form below to start the process, and we will get back to you shortly!
The article was first published on BitX Funding’s blog by the Labate Marketing Agency in Westport, CT