Major Opportunity for Small Businesses & SBA Loans

By: David Jones, SVP - Commercial Lender

Big news! The Small Business Association (SBA) has announced 0% on its Annual Service Fee and SBA Guaranty Fee (Upfront Fee) for loans of $1,000,000 and less. This feature will run for SBA’s fiscal year, October 1, 2023 through September 30, 2024. 

What is a SBA 7(a) loan you might ask?  The 7(a) Loan Program, SBA’s primary business loan program, provides loan guaranties to lenders that allow them to provide financial help for small businesses with special requirements. 7(a) loans can be used for: 

• Acquiring, refinancing, or improving real estate and buildings
• Short- and long-term working capital 
• Refinancing current business debt 
• Purchasing and installation of machinery and equipment
• Purchasing furniture, fixtures, and supplies 
• Changes of ownership (complete or partial)

Typically, a SBA 7(a) loan is used if the borrower does not have enough cash or equity for a standard down payment or if the collateral offered is highly specialized.

Why is this big news? SBA guarantee fees are generally passed from the lender to the borrower and range from 0.25% to 3.75% of the guaranteed portion of the loan. There is also an annual service fee based on the outstanding loan amount. This equates to big savings for borrowers.

The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. A Peoples Community Bank lender will help you figure out which type of loan is best suited for your needs.