Small Business Administration
7A Guaranty Loan Program

Purpose:

The SBA Loan Guaranty Program provides the Bank up to 75% guaranty on Long term loans when the proceeds of the loan are used for fixed asset purchases, working capital, or the refinance of existing debts for owner-occupied business.

Use of Proceeds:

• Up to 90% financing for the purchase of land and /or building.
• Up to 80% financing for the purchase of machinery and equipment.
• Up to 90% financing for the expansion of an existing facility.
• Can refinance 100% of existing debt under certain conditions.
• Up to 80% financing for the purchase of an existing business.
• Can finance working capital and closing costs in conjunction with the above.

Eligible Businesses:

• Operating, for profit Corporations, Limited Liability Corporations, Partnerships

Or Sole Proprietorships.

• Business in existence for minimum of two years.

Target Loan Size:

• Minimum loan of $150,000.
• Maximum loan of $2,000,000.
• Loans above $2,000,000 will be looked at using the SBA's "piggy back" loan program.
• The maximum loan amount under the "piggy Back" program is $3,500,000.

Loan Structure:

• Up to 25 year financing for real estate acquisitions, real estate refinances land purchases or construction loan take-outs.
• Up to 10 year financing for the purchase of an existing business.
• Up to 10 year financing for the purchase of machinery and equipment.
• Up to 7 year financing on working capital, and closing costs.

Interest Rates:

• Loans will be priced on a variable basis, tied to the New York Prime Rate and will adjust quarterly.
• Minimum pricing will be at New York Prime + 1.50%
• Maximum pricing will be at New York Prime + 2.75%

Qualifying Criteria:

• Owner must be actively involved in the business operations.
• Business must have adequate debt service coverage based on historical earnings.
• Business must have an adequate debt to worth based on the adjustments to the pro forma balance sheet using the benefits of the new loan.
• Borrower's business must occupy no less than 51% of an existing building and no less than 67% of the "to be built" facility.
• Alter Ego Ownership of the company's real estate is allowed.

Collateral:

• No unsecured loans are available under this program.
• Goodwill is considered to be an asset when a business is being purchased.
• if the SBA loan is under-collateralized based on the SBA' Liquidation values, the guarantor may be required to collateralized his/her primary residence by utilizing a 2nd or 3rd mortgage.

Fees:

• The SBA does not allow the Bank to charge the borrower points on a 7A guaranteed loan, unless it involves a construction loan. The SBA charges a fee, which is based on the size of the loan guarantee.
• The bank will charge a packaging fee of $1,500 on all loans.

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