U.S. Small Business Administration 7(a)

The 7(a) loan program is described by SBA as its primary business loan program for providing financial assistance to small and medium-sized businesses, including manufacturers. SBA does not lend directly under the programme; instead it guarantees loans issued by participating lenders, which allows those lenders to offer financial help to small businesses with special requirements. The maximum loan amount for a 7(a) loan is $5 million. SBA states that its loans help small manufacturers obtain capital ranging from $500 to $5 million.

• Maximum 7(a) loan amount: $5 million
• SBA guaranty issued to participating lenders
• Aimed at small and medium-sized businesses, including manufacturers
• One of SBA's three business loan programmes, alongside CDC/504 and Microloan

SBA sets out the categories of expenditure that 7(a) loan proceeds may cover. These span property, equipment, working capital and debt refinancing, and a single loan may combine more than one purpose. The lender helps the borrower determine which type of loan suits their needs.

• Acquiring, refinancing or improving real estate and buildings
• Short- and long-term working capital
• Refinancing current business debt
• Purchasing and installing machinery and equipment, including AI-related expenses
• Purchasing furniture, fixtures and supplies
• Changes of ownership, complete or partial
• Multiple purpose loans combining any of the above

SBA lists the conditions a business must meet to be eligible for 7(a) loan assistance. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Applicants must also be unable to obtain the desired credit on reasonable terms from non-Federal, non-State and non-local government sources.

• Be an operating business
• Operate for profit
• Be located in the U.S.
• Be small under SBA Size Requirements
• Not be a type of ineligible business
• Be unable to obtain the desired credit on reasonable terms elsewhere
• Be creditworthy and demonstrate a reasonable ability to repay the loan

Applications are made directly through a participating SBA lender rather than to SBA itself. SBA's Lender Match tool can be used to connect with a participating lender. The contents of the loan application vary depending on the size of the loan and the lender's processing method, and the lender helps the applicant determine which documents are needed based on individual circumstances.

• Use SBA's Lender Match tool to find a participating lender
• Apply directly through the lender
• Documentation varies by loan size and lender processing method

Banks, savings and loans, credit unions and other specialised lenders participate with SBA on a deferred basis to provide small business loans structured under 7(a) guidelines. If a borrower defaults on an SBA-guaranteed loan, the lender may ask SBA to purchase the guaranteed portion. SBA publishes eligibility requirements that institutions must meet to take part in the programme, along with forms, programme updates and training for lenders.

• Continuing ability to evaluate, process, close, disburse, service and liquidate small business loans
• Open to the public to issue loans, and not a financing subsidiary primarily financing an affiliate's operations
• Continuing good character and reputation, meeting SBA's ethical requirements
• Supervised and examined by a state or federal regulatory authority

SBA also operates the 7(a) Working Capital Pilot (WCP), a line of credit programme supporting asset-based and transaction-based financing for working capital needs and new contracts. Asset-Based WCP loans allow borrowers to draw working capital against inventory and accounts receivable, while Transaction-Based WCP can support up to 100% of related expenses for new projects. Domestic and export orders can be financed under a single line of credit, and SBA offers one-on-one counselling with working capital experts. WCP loans have a maximum loan amount of $5 million, with eligibility and application arrangements the same as for 7(a) loans.

• Maximum WCP loan amount: $5 million
• Asset-based and transaction-based structures
• Single line of credit covering domestic and export orders
• Same eligibility and application route as 7(a)