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SBA Loans for
companies in Monatana and the Mountain West
Region
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The Basic Section 7(a) Loan Guaranty Program serves as the SBA's
primary business loan program to help qualified small businesses
obtain financing when the business might not be eligible for
business loans through normal lending channels. It's the SBA's
most flexible business loan program. The customers for this
program are startup and existing small businesses.
Loans under the 7(a) Program are provided by lenders who are
called participants because they "participate" with the SBA in
this program. Most American banks participate in this program,
although not all lenders do. Loans under the 7(a) Program are
available only on a guaranty basis, which means
that the loans are provided by lenders who have decided to
structure their own loans according to the SBA's requirements,
and who apply to and receive from the SBA a guaranty on a
portion of the loan. This is not a guaranty for the full amount
of the loan; the lender and the SBA both share the risk that a
borrower will not be able to repay the loan in full. The
guaranty protects against payment default.
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One of
the SBA's primary loan programs, 7(a) offers loans of up
to $2,000,000. (The maximum dollar amount the SBA
can guaranty is generally $1 million.) |
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SBA 7A Loans - General Parameters
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Loan Purpose: Real estate purchase, business
acquisition, business expansion, construction,
recapitalization, refinance, partner buyout, start-ups,
turn-arounds, working capital, inventory, machinery and
equipment. Program is available nationwide to a variety of
industries. Lender is an SBA Preferred Lender nationwide.
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Property Types: All property types.
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Loan Amount: Up to $2,000,000
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Interest Rate: Variable interest rate.
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Loan Term: Up to 25 years, fully amortizing
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Prepayment Penalty: May prepay up to 25% during the
first 3 years without penalty. Above 25%, prepayment penalty
of 5%, 3%, 1%.
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Personal Guarantee: Full guarantee of all principals who
own 20% or more of the project.
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Loan to Value (LTV): Up to 90%
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Collateral: Mortgage on business real estate, UCC
filings on machinery and equipment.
Download
a .pdf flyer about the program,
by clicking here. |
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The SBA
uses the following criteria to determine if a business
qualifies as a small business that is eligible for SBA
loan assistance:
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Construction - Average (three years) annual sales or
receipts of not more than $12 million to $28.5 million,
depending upon the specific business type;
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Manufacturing and Mining - Depending on the
industry, approximately not more than 500 employees
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Retail
or Service - Depending on the industry, average
(three year) annual sales or receipts of not more than
$6 million up to $29 million
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Wholesale - Not more than 100 employees
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Special
Trade Contractors - A limit of $7 million
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Agricultural Industries - A limit of $.5 million for
most agricultural industries.
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Use of
Proceeds/Ineligible Use of Proceeds:
The proceeds
of a 7(a) loan may be used by a new or existing business to
do the following:
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Construct
commercial buildings
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Expand or
renovate facilities
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Finance
receivables and supplement working capital
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Finance
seasonal lines of credit
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Purchase
machinery, equipment, fixtures, and leasehold
improvements
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Purchase
land or buildings
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Refinance
existing debt, under some circumstances.
The proceeds
of a 7(a) loan may not be used for the following purposes:
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For a
non-sound business purpose
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To repay
delinquent state or federal withholding taxes or other
funds that should be held in trust or escrow
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To make a
partial change of ownership or change in the business
that will not benefit the business
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To
refinance existing debt where the lender might sustain a
loss and the SBA would cover the loss through
refinancing
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To permit
reimbursement of funds owed to any owner of the
business.
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