In addition to industrial, retail, and hospitality projects, Commercial Real Estate Loans underwrites SBA 7(a) loans for: 

• Schools

• Auto dealerships

• Auto repair centers

• Cash washes

• Gas stations

• Healthcare properties

• Medical office buildings

• Dental offices

• Fitness centers

• Convenience stores

Current Rates for SBA 7(a) Loans (Updated Daily)

SBA 7(a) Loan Terms and Eligibility 

SBA 7(a) loans have terms and eligibility requirements including: 

• A maximum loan amount of $5 million with no minimum loan amount (most loans, however, are $30,000 or more).

• The business must meet the SBA's size standards for its particular industry.

• The business must have fewer than 500 employees and less than $7.5 million in revenue each year for the previous three years.

• The business must physically be based in the U.S. and operate within the U.S. and its territories.

• The business must operate for profit.

• Business owners must first have used other sources of financing, including personal funds, to qualify.

• Businesses must not be involved in lending, real estate, or speculation.

SBA 7(a) Pros

• Flexibility in underwriting

• Often has lower interest rates than other comparable financing options

• Long loan terms, up to 25 years for real estate, 10 years for equipment, and 10 years for working capital or inventory

• Flexible collateral requirements

• Lenders are prohibited from charging certain fees, including:

  • Insurance service fees

  • Add-on interest charges

  • Legal service fees (with some exceptions)

  • Broker referral fees

SBA 7(a) Cons

• Requires a borrower to put down all business assets as collateral for the loan

• If a borrower doesn't have enough collateral, they may need to put down personal assets, such as a home or car

• Requires borrowers to have significant equity in the business. Startups must typically have $1 invested for every $3 in SBA 7(a) loans, while established businesses usually must have $1 invested for every $4 in SBA financing

• Cannot be used for businesses trying to pay off unsecured debt

• Requires borrowers to disclose personal and business credit histories

• Prepayment penalties are assessed on loans with a 15+ year term

• Guarantee fees are assessed by the SBA on loans above $1 million

SBA 7(a) Interest Rates, Penalties, and Fees

SBA 7(a) loans have a range of interest rates, depending on loan principal and whether or not real estate is involved.

• Loans involving real estate mature in 20 or 25 years with interest rates between 1.5% and 2.25% above the WSJ Prime.

• Loans without real estate have 10-year terms with interest between 2.25% and 2.75% above prime.

If you're a business owner who finds that their business is going even more smoothly than expected, you might be tempted to pay back your entire SBA 7(a) loan (or a large portion of it) at once. However, making early payments on an SBA 7(a) loan will lead to a prepayment penalty if done within the first three years.

In the first year, the penalty is set at 5%. In the second year, it's set at 3%, and in the third year, the prepayment penalty declines to 1%. 

In addition to prepayment penalties, the SBA charges borrowers a guarantee fee. This varies depending on the exact size of a loan, and the SBA updates the fees regularly. Find the latest guarantee fee schedule.

SBA Certified and Preferred Lenders 

While most SBA loans are offered by lenders that are approved by the Small Business Administration, some lenders have also been certified by the SBA Certified Lender Program. This cuts down on paperwork and allows most Certified Lender loans to be approved in three business days.

Another SBA program, the Preferred Lender Program, allows lenders to make a loan decision without approval from the SBA. In many cases, a potential borrower can be approved for an SBA loan from a Preferred Lender in as little as 24 hours. 

Other SBA Loan Programs 

While the 7(a) loan program is an excellent choice for many small business owners, it's not right for everyone. For businesses looking to get loans up to $350,000, the SBA 7(a) Small Loan might be a better fit. Like typical 7(a) loans, 7(a) Small Loans can be used to purchase owner-occupied commercial real estate, purchase equipment, and to pay for hiring and inventory. However, unlike the regular 7(a) program, the Small Loan Program doesn't require nearly as much analysis of a company's cash flow. This often means loans can be approved much faster.

In contrast, businesses looking for a slightly larger loan (up to around $15 million) to fund larger commercial real estate projects may want to look into the SBA 504 loan. This loan has some similarities to the 7(a) loan, but there are a number of major differences. It is designed specifically for purchasing existing properties, expanding current commercial real estate projects, and funding new construction for small businesses.

Commercial Real Estate Loans is the partner you need to help your small business truly come to life. Whether you're a small startup or an established company, we have the experience and expertise to give your business more financing options!

In this article:

1. Current Rates for SBA 7(a) Loans (Updated Daily)
2. SBA 7(a) Loan Terms and Eligibility 
3. SBA 7(a) Pros
4. SBA 7(a) Cons
5. SBA 7(a) Interest Rates, Penalties, and Fees
6. SBA Certified and Preferred Lenders 
7. Other SBA Loan Programs 
8. Get Financing