- Small Business Administration Section 7(a) loan provides smaller loans with quick turnaround
- Check to see if your small business qualifies
The passing of the Economic Aid to Hard-Hit Businesses, Nonprofits, and Venues Act (“the Act”) brought about buzzwords like “second-round stimulus checks” and “PPP loans.” Fortunately for small businesses, there is help beyond PPP2: the SBA’s 7(a) loan.
The 7(a) loan has existed for years and, like PPP, exists to serve small businesses, is services through SBA member lenders, and was recently revived after the newest COVID-19 relief bill was passed. However, unlike PPP loans, 7(a) is not a grant and thus non-forgivable. 7(a) was created for businesses that, according to the SBA, “might not otherwise obtain funding on reasonable terms and conditions.”
SBA 7(a) loans exist in three forms. Standard loans, which most small businesses receive, max out at $5 million. Small loans max out at $350,000 as do SBA Express loans, which provide a 36-hour turnaround for businesses seeking immediate aid.
Businesses seeking 7(a) loans must be a for-profit organization with fewer than 500 employees or less than $7.5 million in average annual receipts and in good standing with any federal debts. Applicants must substantiate the need for funds and can coordinate interest rates (subject to SBA standards) with the lender upon receiving the loan. Loan monies can be used for purchasing of other entities or properties or for equipment and working capital.
The Act forgives up to eight months of principal and interest payments on 7(a) loans. Senator Chris Coons (D-DE) who championed this addition to the new bill says, “I thought this debt relief program was an opportunity to provide fast, automatic targeted relief to SBA loan holders.”
Call our offices at 516-541-6549 to learn how we can help you and your small business and visit our Coronavirus Information Center for more updates.
Associate, Creative Solutions
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