SBA 7a Loan

The SBA 7a Loan

The 7(a) Loan is one of our most versatile tools. It can be used by any for-profit business for any legitimate business purpose including working capital, inventory, machinery and equipment, real estate acquisition, construction, repair, renovation and refinancing of existing business debt.
The 7(a) Loan is especially useful to help prospective borrowers maximize cash flow capabilities.

How the 7a Loan Works

Alacom Finance, as a licensee of the U.S. Small Business Administration, is authorized to package 7(a) loans. We also contract with commercial banks, savings and loans, credit unions and non-bank lenders to package 7(a) loans. Borrowers must contribute a reasonable cash equity injection as determined by SBA and the lender. The balance is provided by the lender and guaranteed for up to 75% by SBA based on the size of the loan and the equity injection required by SBA.

Lender Fee(s) - SBA Statutory Fees

The following statutory fees apply to the 7(a) Loan and are Statutory and Non-Negotiable:

A Maximum of 3.75% of the guaranteed portion to SBA

All 7(a) Loans after October 1, 2010, will be charged a “Yearly Fee” due from Lenders to SBA. The fee will be 0.55 percent (55 basis points) of the guaranteed portion of the outstanding balance on the 7(a) loan. The 7(a) Yearly Fee is imposed under Section 7(a)(23) of Small Business Act and is referred to as an “Ongoing Servicing Fee”.

Borrower Fee

Alacom Finance charges a non-refundable packaging fee of $2000.00, which is based on the hours of work required to prepare 7(a) loans for submission, (additional fees can apply).

Rates & Terms

Interest rate charges on 7(a) loans are determined in negotiation with the lender. They can be fixed or variable, but shall not exceed Prime + 2.75%

Use of Funds Determines Loan Maturities:

Working Capital 5-7 Years
Machinery & Equipment 8-10 Years
Real Estate Acquisition 10-25 Years

Who Qualifies

Eligible businesses include legal, for-profit enterprises, which comply with the following size standards:

Retail/Service Sales not exceeding $3.5 Million
Wholesalers Sales not exceeding $13.5 Million
Contractors/Manufacturing No more than 500 employees

These size standards may vary under certain federal regulations

Additionally, passive investment companies, not-for-profit corporations, financial institutions, real estate investment companies, gambling establishments, and recreation facilities not open to the public do not qualify for 7(a) loans