The Small Business Administration (SBA) offers loans for small businesses. One of the loans offered is the SBA 7a business loan. It is the most common loan. However, it does have some specific requirements.
The SBA 7a business loan may be the right fit for your business if your business meets some general requirements. Your business must be for-profit and meet the SBA’s definition of a small business. They define a small business according to size standards. Their standards are explained on their website. Your business must be doing business, or going to do business, in the United States. Your business must have reasonably invested equity. You must have used or be using other financial resources before applying for this loan. That can mean using your own assets and money to keep your business afloat. You must be able to prove to the SBA that you really do need the loan and that you will use the loan for sound business reasons. You can’t owe the government any money.
Fishing vessels, franchises, and privately owned medical facilities may be eligible for this loan as well. Legal aliens are also able to apply as long as their businesses meet the other qualifications.
SBA 7a Loan Use
Your business must be able to demonstrate a sound need for this loan. You must be able to show how this loan will finance your business. This loan is right for your business if you need it as long or short term working capital, need to purchase equipment or real estate, need to expand, or if you need to refinance your business debt. However, if you use the loan to refinance business debt, it cannot put the SBA in a position to lose money. The SBA will be the final determining factor of whether or not your plan includes sound business use of proceeds.
SBA 7a Checklist
It’s important that you have certain records available during the application process. This is a good loan choice for businesses that keep good records. The SBA keeps a checklist on their website for those who wish to apply for this loan.
This loan is the right fit for most businesses. Since it is a loan, it does require that you pay it back. Make sure that you will be in a financial position to do so. You can read more about the SBA 7a requirements on their website and learn about other business loans, too.