What are the details of SBA 7a loan program?

searcher profile

August 27, 2021

by a searcher from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School in Austin, TX, USA

Does anyone have a few recommendations for learning details on SBA lending parameters? I'm looking for a primer to evaluate scenarios where it would be most attractive financing option and, if so, how to prepare for the process.

0
10
183
Replies
10
commentor profile
Reply by a searcher
from University of Texas at Austin in Lexington, KY, USA
Best advice I give to people considering SBA is to talk to multiple bankers about what their bank can offer.. Not only is interest rate going to fluctuate greatly, but here are some other things that I found:

(1) Some banks offered interest only periods at start while others said not allowed by SBA (I had interest only for 6 months, so allowed or not, I took advantage of it)

(2) Length of the loan - don't expect every bank to offer the max allowable term

(3) Industry - some banks will just say no to certain industries

(4) Other loan options - my bank ended up finding a solution to split the real estate portion between an SBA loan and a local development corp loan to help with rates and term

(5) Line of credit - see if the bank can help with a LOC from the SBA as well

Just some initial thoughts. The SBA has these "rules" but I quickly figured out that each bank interprets them differently. And make sure you go with a preferred lender, as it will make the process easier.
commentor profile
Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA
^redacted‌ thank you for the tag. ^redacted‌ aside from above recommendations to speaking with multiple lenders, I would suggest look over https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans. Keep in mind Lenders make their own lending decisions and each lender may have different interpretations of SBA guidelines and varying perspectives on industry and structures. GL! Happy to chat generally about sources of capital.
commentor profile
+8 more replies.
Join the discussion