Did you know that the United States Government, through the Small Business Administration, approves and insures over $30 billion in 7(a) loans annually? The SBA doesn’t lend a dime, it merely guarantees 50% to 85% of the loan made by the bank, credit union or other SBA approved lender. Since the SBA stands behind most of the loan, lenders are willing to approve weaker loans and thus approve a larger percentage of applications. If your business needs a loan of up to $5 million to buy a location, refinance debt, buy equipment or buy inventory, the 7(a) program might be your ticket. Let’s look at what it takes.
You can use a 7(a) loan to buy or refinance real estate, acquire a business, buy out a partner, working capital, or purchase equipment.
Yes, but the broker will need to be licensed if you are located in California, New York, Texas (registration), Florida and Illinois. In addition, if the loan is secured by real estate, other states that require broker licensing are Arizona, Idaho, Minnesota, Nevada, New Jersey, North Carolina, North Dakota, Oregon, South Dakota, Utah and Vermont.
The lender is likely to use legal counsel. You are not required to have one but, on the other hand having good counsel will make the process smoother. Some terms of these loans are negotiable and your lawyer can advise you where to push back on the lender’s proposals.
If you need $500,000 or less quickly, the SBA Express Loan may be good for you. The SBA will issue approvals within 36 hours. Because the SBA only guarantees 50% of the loan, your lender will impose higher standards in terms of credit score (650+) and in business for at least 2 years.
[1] Dennis H. Doss, is the founder of Doss Law, LLP and DossDocs, LLC, a 48-year veteran in mortgage law. He is a frequent expert witness in mortgage cases, a frequent speaker at industry events and the creator of DossDocs.com, a nationwide loan document company.
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