Get Regular 7a Guaranty Purchase Package Tabs Form

Do SBA loans require a downpayment? Yes, the minimum SBA loan down payment requirement is 10% on 7(a) and 504 loans and is based on a business's cash flow and collateral. Weak cash flow or low-value collateral can increase the down payment requirement to up to 30% of the loan amount.

To be considered creditworthy, the SBA typically requires a credit score of 690 or above and prefers owners over more than 20 percent of the business provide a personal guarantee. Typically, the SBA will require businesses to explore other financing options before pursuing an SBA 7(a) loan.

The 7(a) Loan Program, SBA's primary business loan program, provides loan guaranties to lenders that allow them to provide financial help for small businesses with special requirements. 7(a) loans can be used for: Acquiring, refinancing, or improving real estate and buildings. Short- and long-term working capital.

The guarantee fee for SBA 7(a) loans ranges from 0 percent up to 3.75 percent. For loans greater than $1 million, the SBA guarantee fee is calculated in two parts. The guarantee fee is 3.5 percent for the guaranteed amount up to $1 million and 3.75 percent for the guaranteed amount over $1 million.

The SBA loan guarantee works as a substitute for the needed collateral and provides the lender with satisfactory security to support the loan. If the borrower fails to repay the loan, the lender can recover the guaranteed portion of the loan from the SBA.

As with traditional small business loans, borrowers still need to repay SBA loans. If you default on an SBA loan, it can affect your credit score and your future chances at other loans. The lender, though, will be able to ask for the payout from the SBA if the loan goes into default, which makes them less of a risk.

For use with all 7(a) Programs. Purpose of this form: The purpose of this form is to collect information about the Small Business Applicant ("Applicant") and its owners, the loan request, existing indebtedness, information about current or previous government financing, and certain other topics.