SBA 7a - New Benefits

SBA is coming out with new benefits not only to help small businesses but also lenders. We want to point out two key items related to 7a loans.

SBA guaranty. The 7a loans will be guaranteed up to 90% which is very attractive for lenders. This means as long as the lender does the appropriate due diligence on their part, the loan they lend out to small businesses is protected at 90% of the amount. What this means is that if the loan defaults and the lender is at a loss, the lender will recoup 90% of the amount from SBA. So their true loss is only 10%.

SBA guaranty fee. SBA is waiving the guaranty fee which is a huge saving for applicants on their closing costs. For example, a $5 million SBA loan would have a SBA guaranty fee of $166,250 (based on 90% guaranty). It is expected that beginning February 1^st of this year, that fee is $0. This is a substantial savings for the small business owners that are in need of financing.

We have been reached by many lenders that halted financing in select industries and are now coming back. If you have any questions related to the topics above or any other topics related to SBA, feel free to reach out to us. Our team members have prior banking experience with extensive knowledge in SBA and can help answers questions related to eligibility and other topics. Don’t forget to subscribe to our newsletter!