SBA 7A Guaranty Loan

SBA 7A Guaranty Loan

The purpose of this program is to provide flexible financing to small businesses for development and growth when conventional financing is not available.

SBA Service Area: Georgia, South Carolina, Florida

Cash/Equity Injection
The cash or equity injection of the company may vary from 10% to 50%,  depending on the collateral pledged to secure the loan, the viability of the project, and the profitability of the company. SBA generally will not provide 100% financing for an applicant.

Maximum Loan Amount
The maximum loan amount is $5,000,000. The maximum guaranty is 75% ($3,750,000) for loans over $150K. For loans under $150K, the guaranty is 85%.


Rate/Term
The funding bank determines the interest rate and term.

The maximum variable interest rate for loans maturing in less than 7 years cannot exceed 2.25% above Wall Street Journal Prime. For loans maturing in 7years or more, the maximum interest rate cannot exceed 2.75% above WSJP.

The maximum fixed interest rate a lender may charge is published in the in the Federal Register periodically.

Eligible Uses of Proceeds

  • Acquisition of land
  • Construction of new building
  • Purchase of existing building
  • Renovation of existing structure
  • Machinery & Equipment
  • Professional Fees (survey, appraisal, environmental, architect, etc)
  • Signage
  • Construction fee/Interim Interest
  • Working Capital
  • Inventory
  • Refinancing (must show at least a 10% improvement in cash flow)

Types of Eligible Businesses

  • For-Profit
  • Owner must be a legal, U.S. resident
  • Owner-occupied (borrower must occupy at least 51% of existing building and at least 60% of “new” building)

Benefits to Borrower

  • Reduced cash/equity injection
  • Longer Repayment Terms
  • SBA guaranty encourages the bank to approve the loan request
  • Application is prepared by CADDA
  • Community benefits from the economic activity

Benefits to Bank

  • Customer base is increased
  • CRA requirements are satisfied
  • Credit risk is reduced
  • Bank is allowed to determine its interest rate
  • Loan may be eligible to be sold in secondary market
  • Minimal paperwork. (CADDA prepares the application; Bank provides commitment letter)

Fees

Maturity Length and Size of Guaranteed Portion Fee Measures as Percentage of Guaranteed Portion  When Payable Lender May Get Fee From Borrower When SBA Refunds Fee From Borrower
12 Months or less 0.25% With GuaranteeaApplications When SBA Approves Loan If Application Withdrawn or Denied (1)
More Than 12 months And Total Guaranteed PortionIs $150,000 or Less 2.0% (Lender may retain 25%of this fee) Within 90 Days of SBA Approval After First Disbursement If Loan Canceled and Never Disbursed
More Than 12 Months And Amount of Guaranteed Portion of Loan is Between $150,000 and $700,000 3.0% Within 90 Days of SBA Approval After First Disbursement If Loan Canceled and Never Disbursed
More Than 12 Months And Amount of Guaranteed Portion of Loan Exceeds $700,000 3.5% Within 90 Days of SBA Approval After First Disbursement If Loan Canceled and Never Disbursed
More Than 12 Months And Amount of Guaranteed Portion of Loan Exceeds $1,000,000 3.75% Within 90 Days of SBA Approval After First Disbursement If Loan Canceled and Never Disbursed