SBA 7(a) Loan Basics

SBA 7a Loan BasicsFor Profit

The business must be operated for profit.

Size Standards

Size is determined based on the average number of employees for the preceding 12 months, or on sales volume average over a 3 year period. However, even if approval of your loan proceeds will result in an increase in size beyond the size standards, your current size is considered. Most businesses fall into one of the following categories.

  • Manufacturing: Up to 500 employees
  • Wholesaling: Up to 100 employees
  • Services: Annual sales up to $7 million
  • Retailing: Annual sales up to $21.5 million
  • Construction: Annual sales up to $17 million

Use of Proceeds

Your SBA 7(a) loan request will be considered ineligible if you intend to use proceeds to:

  • provide funds for speculation
  • purchase real estate to be primarily held for sale or investment
  • create or encourage a monopoly
  • create or encourage a conflict of interest
  • pay delinquent state and federal taxes

Business Type

If your business falls within one of the following categories, it is ineligible for an SBA loan.

  • Non-profit organization
  • Financial business primarily engaged in the business of lending
  • Passive business owned by developers and landlords
  • Academic school with a religious affiliation
  • Speculative firm
  • Life insurance company
  • Business located in a foreign country
  • Gambling facility
  • Pyramid sales organization
  • Recreational facility not open to the general public
  • Business engaged in any illegal activity
  • Private club or business which limits the number of memberships for reasons other than capacity
  • Government-owned entity
  • Consumer and marketing cooperative
  • Loan packager earning more than one-third of their gross annual revenue from packaging SBA loans
  • Business with an associate who is incarcerated, on probation, on parole, or has been indicted for a felony or crime of moral corruption
  • Business which presents live performances of an offensive sexual nature; or sells products or services of a sexual nature
  • Unless waived by SBA for good cause, business that has previously defaulted on a Federal loan
  • Business primarily engaged in political or lobbying activities

SBA 7(a) Loan Terms

SBA loan terms are calculated based on the use of proceeds. The following list shows what loan terms are available based on the use of proceeds.

  • New building purchase: 25 years
  • Building improvements: 25 years
  • Mortgage refinance: 25 years
  • Machinery & equipment purchase: 10 – 15 years
  • Leasehold improvements: 10 years
  • Other debt refinance: 7 – 10 years
  • Inventory: 7 years
  • Working capital: 7 years