A General-Purpose Loan for Small Businesses
An SBA 7(a) Term Loan is the most common general-purpose loan backed by the Small Business Administration.
First National Bank of Northfield can finance a loan up to $5 million, which is guaranteed up to 75 percent by the SBA. Proceeds may be used for working capital, business purchase, inventory, equipment, or buildings and land.
Contact one of First National’s experienced business bankers to see if you qualify.
|Cash Conservation||SBA requires lower down payments that most conventional loan products, allowing the business to retain more cash.|
|Lower Payments||Smaller payments over a longer period of time.|
|No Balloon Payment||Loan is paid off at the end of the amortization period.|
|Easier Qualification||Businesses with less collateral than required for conventional loans may qualify for SBA-guaranteed loans. However, if the loan is not fully secured, other business and personal assets may be required.|
|Finance Project Costs||All project costs can be financed, including land, building and construction costs and soft costs such as title insurance, legal fees, appraisal, environmental and bridge loan fees. Closing costs may also be financed.|
|Projected Income Consideration||SBA lenders consider projected income of a business in addition to historical cash flows. This is particularly advantageous for startup and growing business.|
SBA 7(a) Term Loan Information
Including affiliates, tangible net worth not in excess of $15 million.
Net profit after tax averaging less than $5 million for the previous two years.
Small business qualification by SBA guidelines.
Size varies by industry type.
|Loan Size||Loan amount up to $5 million.
SBA loan guarantee cannot exceed $3.75 million.
|Use of Proceeds||Land | Buildings | Equipment | Purchase Business | Inventory | Working Capital|
|Financing||Provided by First National Bank of Northfield.
SBA provides 85% guarantee to First National on loan amount of $150,000 or less;
75% guarantee on loan amount of $150,000 or more.
|Collateral||First National to take first secured interest in business assets and/or a mortgage on real estate.|
|Underwriting Requirements||Personal guaranties by all owners of 20% or more.
Life insurance on business principals.
Adequate business collateral or personal assets securing personal guarantee, e.g. mortgage on home.
|Loan Terms||Working Capital: up to 7 years.
Equipment: up to 10 years or useful life.
Real Estate: up to 25 years.
|Interest Rates||Variable rates based on Wall Street Journal prime rate.|
|SBA Guarantee Fee||SBA Guarantee Fee (may be financed with the loan):
Loans up to $150,000 – 2% of the guaranteed portion of the loan;
Loans from $150,001 to $750,000 – 3% of the guaranteed portion of the loan;
Loans from $750,001 to $5 million – 3.5% of the guaranteed portion up to $1 million and then 3.75% for guaranty above $1 million.
|Application Materials||View the application and materials checklist|