Here’s a quick look at 7a small loans
7a Small Loans
7a small loans only go up to $350,000 maximum. The key feature of this SBA financing program is that lenders can offer an easier application process versus standard 7a loans. When you apply, the lender submits your credit information to the SBA electronically. The SBA then generates a special credit score based on your information.
If the SBA considers your credits score satisfactory for financing, they will allow the lender to approve your business loan using a simplified process. You will need to submit fewer documents than are required for a standard 7a loan (just enough to show that you have the income to pay back the loan). For example, the lender could ask you to provide past cash flow statements.
If you do not score high enough on the credit test, then the SBA will ask the lender to put your application through the standard 7a application process.
Other SBA 7a small loan rules
The collateral requirements for 7a small loans are easier because you cannot borrow more than $350,000. If you borrow more than $25,000, the lender will file a lien against any assets bought using the SBA small loan. They may also file a lien against your other business assets, but not against your personal assets.
The 7a Small Loan program follows similar rules as standard 7a loans. You apply using Form 1919 listing your information as a borrower, and SBA Form 1920 (submitted by the lender), which lists the details of your 7a Small Loan. The SBA guarantees the same percentage depending on your loan amount: up to 85% for loans below $150,000 and up to 75% for loans over $150,000.
If an SBA guaranty fee applies, you will need to pay it. You will also pay interest, just as you would with a standard 7a loan. Even though 7a Small Loans have a simplified application process, the SBA still takes five to 10 days to give you a decision.