Obtaining an SBA 7(a) loan through a bank takes some preparation. Before choosing your lender, find out how the process works so you can make an informed decision.
What can SBA 7(a) loans be used for?
The US Small Business Administration’s 7(a) loan program is the most popular option they provide as financial assistance for small businesses. The SBA guarantees a major portion of the amount issued by its approved lenders in the case of default, which reduces the risk involved. 7(a) loan rates, terms, and fees will depend on the specific lender.
A working capital SBA loan can be applied to expenses like equipment purchases, marketing programs, hiring, and other costs that help your day-to-day operations grow. SBA loans can also help you refinance existing business debt, whether that be merchant cash advances, high-cost and short-term loans, or credit cards. Looking to open a new location or refinance an existing mortgage? 7(a) loans can also be used to cover the cost of commercial real estate with minimal down and no balloon payments.
The SBA has a dedicated program for 7(a) lenders that includes benefits like a more streamlined process, access to unique resources, and an established relationship. Banks who join the SBA lending program typically package 7(a) loans more quickly because of their affiliation with the government agency. Look for SBA partner lenders if you’re in the market for a 7(a) loan.
At SmartBiz, our bank partners can increase efficiency by up to 70% by moving their lending operations online. Our platform matches qualified borrowers with the trusted lending partner who can provide affordable financing through SBA loans. That’s why about 90% of the SBA loans we refer to our bank partners are approved.
Pros and Cons of an SBA 7(a) loan
7(a) loans are a win-win for banks and borrowers. Because of the guarantee, the borrower has the advantage of government support and the lender faces less risk issuing the loan. For small business owners, this means they can secure larger amounts with longer terms and lower interest rates.
On the flip side, SBA loans can have one major downside. If you’re a business owner looking for quick funding, the paperwork involved in the application may seem daunting. Not only that, but if a lender says “no,” you’ll have to start from scratch at a different bank. That’s why some businesses resort to costly alternatives that might appear convenient in the short term, but really take a toll on cash flow in the long run.
SmartBiz is here to help entrepreneurs like you qualify for the low-cost, long-term, secure funding you deserve. Using our online marketplace of several bank partners, you only need to submit one application and we’ll match you with the lender most likely to fund your unique business.
SBA 7(a) loan process through SmartBiz
When you choose to work with SmartBiz on your SBA loan application, you’ll find a streamlined, online design where you can securely upload your financial documents from the comfort of your own home or office. You’ll start by pre-qualifying in less than 5 minutes and then move through the checklist with a dedicated specialist providing support along the way.
When we’ve found a good fit in one of our lending partners, your application will be connected, evaluated, and approved if your business meets all the requirements. Then, you can receive your low-cost financing in as fast as 7 days.
Interested in learning where your small business stands even before starting your application? Sign up for SmartBiz Advisor, where you’ll find personalized recommendations and actionable insights to help you strengthen your lending profile according to our bank partners’ key criteria, which they use to assess the financial health of their applicants.