06 Jan SBA 7a Financing
An attractive resource for business and commercial real estate borrowers
SBA 7(a) lending is a fantastic resource for borrowers in industries including hospitality, medical, assisted living/skilled nursing, retail, manufacturing restaurants and more. Its name comes from the narrative section of the Small Business Administration Act, which authorizes the agency to fund small business. Applicants must meet certain eligibility criteria including occupancy and/or use of at least 51% of the space.
The loan doesn’t come from the SBA; it comes from an approved commercial lender, and you can find those easily within a quick internet search. The attractiveness to borrowers is the range of loan sizes, long repayment terms and relatively low-interest rates. The attractiveness to lenders is that up to 75% of the loan is guaranteed by the SBA. That means, if a borrower defaults the lender can recoup a certain percentage of the balance.
What should borrowers know?
Not all SBA 7(a) lenders are created equal. Lenders not only have latitude in what portions of the SBA platform they use but also are allowed to set their own restrictions and criteria. What that means for the borrower is that one SBA lender might say “we decline to fund your request and another will say “oh, absolutely!”
The Cornovus Difference
We work diligently to determine which lenders are most likely to approve your transaction. Many of our customers found success with us after being turned away by local sources. We find that lenders who specialize in SBA are quite different than lenders who do a few transactions a year. The same holds true for lenders who specialize in funding a certain sector such as hospitality or dental practice. If your project has merits, don’t give up! Call us and see if we can facilitate the capital you need.
Note: While SBA 7(a) will fund loans as small as $25,000, Cornovus Capital works with borrowers seeking to borrow a minimum amount of $750,000.