SBA Loan and Investment Products: 7(a), 504, Microloans

The 7(a) loan program is SBA's primary business loan programme for providing financial assistance to small and medium-sized businesses, including manufacturers. SBA provides guaranties to participating lenders, which allows them to offer financing to small businesses with special requirements. The maximum loan amount is $5 million, and eligibility rests on what the business does to earn income, its credit history and where it operates. Applicants can use SBA's Lender Match tool to connect with a participating lender and apply directly through that lender.

• Maximum loan amount of $5 million
• Uses include real estate, working capital, debt refinancing and equipment
• Covers machinery and equipment purchase and installation, including AI-related expenses
• Applicant must be an operating, for-profit business located in the U.S.
• Applicant must be small under SBA size requirements and creditworthy
• Credit must be unavailable on reasonable terms from non-governmental sources

The 7(a) Working Capital Pilot is a line of credit programme supporting asset-based and transaction-based financing. It is designed to help manufacturers manage working capital needs and take on new contracts. The programme allows borrowers to draw working capital against inventory and accounts receivable under an asset-based WCP loan, and to finance new projects under a transaction-based WCP. Domestic and export orders can be financed under a single facility, and SBA offers one-on-one counselling with its working capital experts.

• Asset-based WCP loans drawn against inventory and accounts receivable
• Transaction-based WCP for financing new projects
• Single facility covering domestic and export orders
• One-on-one counselling with SBA working capital specialists

The CDC/504 loan program is issued by organisations designated by SBA as Certified Development Companies. A 504 project combines a loan secured from a private sector lender holding a senior lien, a loan secured from a CDC backed by a 100% SBA-guaranteed debenture, and a borrower contribution of at least 10% equity of the total project cost. SBA maintains a dedicated resource page where authorised CDCs access forms and programme updates.

• Issued by SBA-designated Certified Development Companies
• Private sector lender holds a senior lien
• CDC portion backed by a 100% SBA-guaranteed debenture
• Borrower contributes at least 10% equity of total project cost

The Microloan program provides loans of $50,000 or less to small businesses and certain non-profit childcare centres. Microloans are not issued by SBA directly but are provided through intermediary lenders designated by the agency. Intermediaries use SBA's lender resources to access forms and programme updates.

• Loans of $50,000 or less
• Available to small businesses and certain non-profit childcare centres
• Delivered through SBA-designated intermediary lenders

An SBIC is a privately owned company licensed and regulated by SBA that invests in small businesses through debt, equity or a combination of both. SBA does not invest directly in small businesses; it provides funding to qualified SBICs, which combine private funds with SBA-guaranteed funding. More than 300 licensed SBICs are listed in SBA's online directory. A typical SBIC investment is made over a three-year period, and each SBIC sets its own profile for industry, geography, company maturity and financing size.

• More than 300 SBICs licensed by SBA
• Typical SBIC loan ranges from $250,000 to $10 million at 9% to 16% interest
• Typical equity investments range from $100,000 to $5 million
• Debt-with-equity financing ranges from $250,000 to $10 million at 10% to 14% interest
• At least 51% of employees and assets must be within the U.S.
• Farmland, real estate and financing are among the ineligible industries

SBA loan products reach borrowers through certified lending partners, including banks, savings and loans, credit unions and other specialised lenders, as well as CDCs and microloan intermediaries. The SBA guaranty allows partners to offer lower rates and longer terms than standard loans, and SBA will purchase the guaranteed portion of a loan if a borrower defaults. Lenders must be able to evaluate, process, close, disburse and service loans, be open to the public, hold continuing good character and reputation, and be supervised by a state or federal regulator.

• Three business loan programmes: 7(a), CDC/504 and Microloan
• Federal guaranty backs loans issued by certified lenders
• SBA purchases the guaranteed portion on borrower default
• Lenders must be supervised and examined by a state or federal regulator