Starting a business is not just complicated, it?s expensive. That?s why start-ups and small businesses have the option to finance their venture with small business 7a loans. If you?re in the hotels or restaurant industry, starting a daycare center, or opening up a nursing home and need help on the financial end, this article is for you.
What is an SBA 7a loan?
The Small Business Administration (SBA) is a U.S. government agency that provides support to small businesses and entrepreneurs. The 7a Loan Program helps these businesses obtain loans from participating lending institutions.
Who is eligible for a 7a loan?
Most businesses are considered eligible for financial assistance from the Small Business Institution. The guidelines state that a business or business-owner must:
- Be a for-profit enterprise
- Conduct business in the United States
- Have owner equity to be invested
- Have a record of good character and sound business practices
Who is not eligible for 7a loans?
Businesses conducting illegal activities, multi-sales distribution, gambling, charitable giving, or investing are not eligible. Additionally, entrepreneurs who are no parole are not eligible either. Here are a few examples of such enterprises:
- Pyramid sales companies: Businesses in which the participant?s incentive is based on sales made by a growing number of participants below him.
- Racetracks and casinos: Any business based primarily in gambling.
- Real estate investment firms: Any business that holds property for investment purposes.
- Churches: Entities promoting religious objectives or any organization based on charitable donations are not eligible.
What can a 7a loan be used for?
These loans may be used to open up a new business or to expand or continue the operation of an existing business. They cannot be used to pay delinquent taxes, refinance debt in a way that would be detrimental to the lender, or conduct unsound business practices. Acceptable uses of these loan funds include:
- Purchasing new equipment
- Covering the cost of construction
- Refinancing debt in a way that is beneficial to both the borrower and the lender
- Other short- or long-term needs
Is there a maximum or minimum loan amount?
The maximum amount that can be borrowed under the 7a loan program is $5 million.
If you are interested in learning more about 7a loans, reach out to Anchor Banc and check out the U.S. SBA website today.