The Loanplaced SBA 7(a) guide
The SBA 7(a) is the most flexible small-business loan program in the US — and the most document-heavy. Loanplaced's small business lead has placed over 400 SBA 7(a) loans across her career. Here's how to know if it fits, and how to structure the file to actually close.
What SBA 7(a) is (in plain language)
The SBA 7(a) is a loan program where a private lender (bank, credit union, or non-bank SBA lender) makes the loan, and the Small Business Administration guarantees 50-85% of the balance. The guarantee lets the lender take more risk, which lets them lend to businesses that don't qualify for conventional commercial credit.
The core parameters
| Parameter | SBA 7(a) |
|---|---|
| Maximum loan amount | $5 million |
| Typical rate | Prime + 2.75% to Prime + 4.75% |
| Term | 10 years for working capital, 25 years for real estate |
| Prepayment penalty | Only on terms ≥15 years (declining over first 3 years) |
| Down payment / equity injection | 10-15% for business acquisitions; often 0% for expansion |
| SBA guarantee fee | 0-3.75% depending on loan size |
| Personal guarantee | Required from all 20%+ owners |
| Time to close | 30-60 days (Loanplaced median: 34 days) |
What SBA 7(a) can be used for
- Business acquisition — buying an existing business
- Partner buyout — buying out a co-owner
- Working capital — inventory, payroll, seasonal cash flow
- Equipment — machinery, vehicles, technology
- Commercial real estate — purchase or construction of owner-occupied property (51% owner-occupied minimum)
- Debt refinancing — replacing higher-rate business debt (specific eligibility rules)
- Franchise purchase — for SBA-approved franchisors
Basic eligibility
- Business operates for profit in the US
- Meets SBA size standards (varies by industry, generally under $8M average annual revenue for most industries, or under 500-1,500 employees)
- Owner(s) have "invested equity" — cash, sweat, or other resources at risk
- Cannot obtain reasonable credit elsewhere (the "credit elsewhere" test)
- Owners of 20%+ have "acceptable" personal credit — typically 680+ FICO
- Business is not on the SBA's excluded industries list (payday lending, gambling, adult, cannabis at federal level)
The document set Loanplaced needs
SBA 7(a) is document-heavy. This is what we'll ask for:
- 3 years of business tax returns (or projections if newer)
- 3 years of personal tax returns for each 20%+ owner
- YTD interim P&L and balance sheet
- Debt schedule (business + personal)
- Personal financial statement (SBA Form 413) for each 20%+ owner
- Business plan with 3-year projections
- Use of funds narrative
- For acquisitions: purchase agreement, target's 3 years of returns, business valuation
- For real estate: property purchase contract, appraisal (ordered by lender)
- Corporate documents (articles, operating agreement, EIN letter)
- Government ID for each owner
The three things that get SBA 7(a) files denied
- Insufficient debt service coverage. Lenders want global DSCR > 1.15 (loan payment plus existing debt ÷ business cash flow). Below that, files get restructured or denied.
- Personal credit under 680. Especially for acquisitions. Loanplaced flags this before submission.
- Character or compliance issues. Undisclosed bankruptcy, pending litigation, unpaid taxes, or SBA loan default in the past 7 years. All are file-killers.
Loanplaced pre-submission review. Loanplaced runs every SBA 7(a) file through a pre-submission review before we approach a lender. Files with clear eligibility issues get restructured or advised to wait — because a failed SBA submission stays visible to other lenders and hurts your next attempt.
Loanplaced SBA 7(a) placement process
- Discovery call (30 minutes with our CPA-led small business team) — assess fit
- Document collection (7-14 days) — Loanplaced supplies a checklist and reviews as documents arrive
- Lender matching (3-5 days) — match your file with 1-2 lenders whose portfolio fits your industry and structure
- Submission & underwriting (14-30 days) — Loanplaced manages lender communication throughout
- Approval & closing (7-14 days) — closing packet, funding, disbursement