Hi there! Part II of SBA loans will cover the 7a loan program. In part I I told you about the SBA 504 loan program. Here are the highlights of the 7a program. Again, if you're a realtor you may have clients who didn't realize they could purchase their own commercial real estate through an SBA loan program.
SBA 7a loans are different than 504 loans in that the maximum loan amount is $2,000,000 as opposed to $4 million. The interest rates are the same (prime plus 2.25-2.75) but they can be locked in for a certain period. With 504 loans the interest rate floats with the prime rate. Since interest rates are predicted to rise over the coming year, if you do a 504 loan expect your rate to rise.
The SBA 7a loan program is really designed for smaller loan amounts. There is no SBA guaranty fee right now (typically 2-3.5% of the loan amount) and, in some cases, banks are waiving some of their fees as well. The SBA 7a loan program is also amortized over 25 years (as opposed to 20 for an SBA 504 loan) so your payment should be less. Minimum down payment is 10% although you will be expected to have assets in reserve. This goes for both programs.
Between the two, SBA has got you covered. Turn times are typically 6-8 weeks so the old days where SBA was viewed as cumbersome and expensive have largely gone by the wayside. Feel free to contact me if you have any other questions. Have a great day and, remember if you're in the real estate business, this might be another way for you to make some money!
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