The Small Business Administration (SBA) announced effective May 11, 2023, the agency is increasing the maximum SBA 7(a) Small Loan to $500,000 from $350,000. This increase puts the 7(a) Small Loan at the same maximum as the SBA Express Loan Program. Both the SBA 7(a) Small Loan Program and the SBA Express Loan Program play significant roles in supporting small businesses by providing access to capital and favorable loan terms. These programs empower entrepreneurs to fuel their growth, pursue opportunities, and contribute to economic development.
The SBA Express and 7(a) Small Loan Programs offer a quicker and more streamlined process, making it suitable for businesses with smaller financing needs or those requiring a rapid infusion of capital. In contrast, the SBA 7(a) Standard Loan Program offers loans up to $5,000,000. The Standard 7(a) loan application process is slightly more involved, requiring comprehensive documentation and a more detailed underwriting process. However, it provides greater flexibility for businesses with substantial financing needs.
| 7(a) Small Loan | SBA Express Loan | |
|---|---|---|
| Maximum loan amount | $500,000 | $500,000 |
| Maximum SBA guarantee % | 85% if < $150,000; 75% if > $150,000 | 50% |
| Loan Term | 10 years or 25 if real estate | 10 years or 25 if real estate |
| Interest rate | Can't exceed SBA loan rates max | Can't exceed SBA loan rates max |
| Eligibility decision | By the SBA or by lender if PLP | Made by the lender |
| SBA turnaround time | 5-10 business days | Within 36 hours |
| Forms | SBA Forms 1919 and 1920 | SBA Form 1919 plus lender's forms |
| Collateral | Lenders existing collateral policy if > $25,000 | Lenders existing collateral policy if > $25,000 |
| Personal Guarantee | Required for >20% owners | Required for >20% owners |
| Credit decision | By the SBA or by lender if PLP | Made by lender |
The top lender in America for loans under $500,000 has traditionally been Huntington Bank. For an introduction to a banker from Huntington, tell us about your project here and we will connect you today with a Huntington banker eager to discuss an SBA Express or 7(a) Small Loan with you.
These industries have historically shown a significant demand for SBA Express Loans or 7(a) Small Loanss:
- Retail Trade: Small businesses in the retail sector, including specialty stores, boutiques, and online retailers, often utilize SBA loans for working capital, inventory purchase, expansion, and equipment financing.
- Accommodation and Food Services: Businesses in the hospitality industry, such as hotels, restaurants, cafes, and food trucks, frequently seek SBA loans to cover startup costs, renovation expenses, and equipment purchases.
- Healthcare and Social Assistance: This sector includes medical practices, clinics, home healthcare services, and other healthcare-related businesses. SBA loans can help with practice acquisition, equipment financing, facility expansion, and working capital.
- Professional, Scientific, and Technical Services: Businesses in this category encompass a range of professional services, such as law firms, accounting firms, consulting agencies, engineering firms, and IT services. SBA loans can support these businesses in expanding their operations, hiring staff, and upgrading technology.
- Construction: Small businesses in the construction industry, including general contractors, subcontractors, and specialized trade contractors, often utilize SBA loans for equipment financing, project funding, and working capital to support their construction projects.
- Manufacturing: Manufacturers across various industries, including food processing, electronics, textiles, and machinery, may seek SBA loans for equipment purchase, inventory financing, and working capital needs.
- Transportation and Warehousing: Businesses involved in transportation, logistics, and warehousing, such as trucking companies, freight brokers, and logistics providers, often use SBA loans to acquire vehicles, expand fleets, and enhance warehouse facilities.