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#2 <br />¨³¸ ®¥  ¬²¤¸ <br />%¢®­®¬¨¢ $¤µ¤«®¯¬¤­³ <br />0±®©¤¢³ &¨­ ­¢¨­¦ 4®®«² <br /> <br /> <br /> <br /> <br />SBA 7 (a) GUARANTEED LOAN PROGRAM <br /> <br />This program works by providing a SBA administered loan guarantee to a private lender; which results in <br />reducing risk for a private lender and making a project more attractive to fund and move forward. <br /> <br />Program Purpose: To aid small businesses having difficulty obtaining conventional bank loans. <br /> <br />How it Works: The SBA guarantees a commercial lender up to 85% repayment on its loans to <br />eligible businesses. Equity requirements, rates, and terms will be set by the <br />lender. <br /> <br />Eligible Businesses: Business must be for-profit and have a positive net worth. <br /> <br />Eligible Costs: Working capital, machinery and equipment, leasehold improvements, land and <br />building acquisition, construction and renovation of buildings, purchase of <br />businesses, and refinancing of existing short-term debt. <br /> <br />Amount Available: SBA's 7(a) Loan Program has a maximum loan amount of $5 million dollars. <br />SBA's maximum exposure is $3.75 million. Thus, if a business receives an SBA <br />guaranteed loan for $5 million, the maximum guaranty to the lender will be <br />$3.75 million or 75 percent. <br /> <br />For those applicants that meet the SBA's credit and eligibility standards, the <br />Agency can guaranty up to 85 percent of loans of $150,000 and less, and up to <br />75 percent of loans above $150,000. <br /> <br />Equity Required: Depends on the net worth of the business. 30% to 50% equity may be required <br />for start-up businesses. <br /> <br />Interest Rate: Maximum rate for loans under seven years is 2 ¼ % over prime; maximum is 2 ¾ <br />% over prime for loans seven years or longer. <br /> <br />Term of Loan: Varies with the useful life of the assets being financed. <br /> <br />Collateral: Generally, first lien on assets being financed. Additional security is determined <br />by lender on a project-by-project basis. <br /> <br />Fees: SBA will charge a guaranty fee of 2% of the guaranteed portion of the loan. <br /> <br />Approval Process: Loan application must first be approved by a commercial lender. After <br />completion of the packaging work, the lender then submits the package to the <br />SBA for approval. After SBA approval the lender disburses the proceeds to the <br />business. The entire process takes about 4 to 8 weeks <br /> <br /> <br />