Use of Proceeds
Your business must be operated for profit. SBA 7(a) loan proceeds can be used for the following purposes:
- Acquisition and/or improvements of owner occupied commercial real estate
- Leasehold Improvements for owner occupied space (no tenant improvements)
- Acquisition of Machinery and Equipment
- Working capital
- Inventory purchase
- Business acquisition
- Start a business
- Refinance debt
Loan proceeds may also be used towards the payment of professional third party and closing fees directly tied to the loan request (i.e. architectural fees incurred for drawings of a proposed building), and some other administrative costs.
SBA 7(a) Loan Terms
SBA loan terms are calculated based on the use of proceeds
Down payments vary with use of proceeds (as little as 10%)
Existing equity may be substituted for down payment
All loans are fully amortized, no balloon payments
Loan terms up to 25 years (commercial real estate)
A 3 year pre-payment penalty applies to loans in excess of 15 years (5-3-1%)
