COVID-19 Relief Series, Part 3: What is an SBA 7a Loan?

COVID-19 Relief Series, Part 3: What is an SBA 7a Loan?
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What is an SBA 7a loan?

An SBA 7a loan is an SBA-backed loan through a private lender. There are several types of SBA 7a loans, including the Standard 7a loan, the 7a Small Loan, the SBA Express Loan, and more. When people say, “SBA Loan,” they are typically referring to this popular program. A standard 7a loan is available for up to $5 million at a fixed interest rate. The SBA guarantees 85% of it for loans up to $150,000 and 75% for larger loans. The small loan has a maximum amount of $350,000. No collateral is necessary for loans under $25,000. Learn more at the SBA.

So, how does this apply to the CARES Act?

SBA 7a Loan and the CARES Act

The CARES Act created the Paycheck Protection Program, where small businesses can apply for the SBA 7a Loans. These loans are forgivable loans, as long as the business uses the funds to pay employees and other associated costs of keeping people on the payroll. Learn more in Part 2 of our COVID-19 Relief Series: Paycheck Protection Program (read the whole series).

Congress recently allocated additional funding to the program and SBA lenders are once again accepting applications. So, get yours in while you can! If you have questions or need help, call our office at 888-297-3321.

Who Qualifies for the CARES Act Loan?

Generally, any small business with fewer than 500 employees is qualified, including freelancers, gig workers, 1099 workers, etc. There are some exceptions to the 500-employee rule, so check this listing (PDF) if your business has more than 500 employees. 

Additionally, here is the SBA formula for figuring out your maximum loan amount available under the CARES Act.

Take the First Step

We highly encourage you to take advantage of the CARES Act Paycheck Protection Program’s SBA 7a Loan. If you own a small business, including sole proprietors and freelancers, then you qualify. The purpose of the program is to keep employees getting paychecks, including you, the business owner. If you have any questions about the process or need a referral to a good SBA 7a lender, call our office and set up a free consultation. Call ASCEND’s Office at 888-297-3321 right now.