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	Business Loan Basic 7(a) Loan Program The costs associated with running a business can sometimes be overwhelming. Both start-up costs and operating costs can mount up. The Small Business Administration (SBA) can help small business acquire the funding necessary to continue to be successful.   The 7(a) loan program is the most utilized loan program through the SBA. Loans can be provided for land and buildings, equipment and supplies, working capital, refinancing of unreasonably termed debt and the purchase of existing businesses. Many commercial lenders work with the SBA to provide this loan program. Basically, the 7(a) loan is a guaranteed loan through a commercial lender.  The process is simple. A business owner applies for a business loan through a commercial lender. If the lender decides that the business does not meet their lending standards, they may require a SBA 7(a) guaranty on the loan. The guaranty is for a percentage of the overall loan amount. For example, if the lender considers you a high risk, they may require a 95% loan guarantee through the SBA. Your loan, terms and final approval is through the commercial lender. After the SBA approves the loan application, they assume the role of a cosignatory - both the lender and the SBA share the risk that the borrower will not be able to repay the loan in full. If the business is unable to repay the loan, the lender will receive a payment from the Government for the amount of guaranty. To be eligible for a 7(a) loan through the SBA the applicant must be creditworthy and eligible. The primary consideration in the SBA loan decision is the repayment ability from the business' cash flow. It is also important that the business owners show good character, management capability and collateral. The business must demonstrate a need for the funding and show a history of repayment of debt. The terms of the loan are negotiated between the applicant and the commercial lender; however, 7(a) loans typically have terms favorable to the applicant. Interest rates are subject to maximum rates based on the amount and length of the loan. These rates are often lower than the lender's non-guaranteed loan rates. The SBA also encourages longer repayment times for small businesses. There is a 25 year maximum term for real estate and construction loans. Working capital loans must be repaid within seven years. There are prepayment penalties depending on the length of the repayment on loan. The maximum loan amount the SBA will work with is $2 million. The 7(a) loan guaranty will cover up to $1.5 million of the loan. This would be considered a 75% loan guaranty. The amount you are eligible to borrow is based on your industry and size of business. The SBA 7(a) loan program helps make loans available for small businesses that have difficulty finding funding through commercial loan programs. The 7(a) loan provides a way for the business to form a relationship with a local lender under favorable terms for both the business and the lender. Whether you are looking to purchase a new business or expand an existing business, the Small Business Association's 7(a) loans can provide the funding you are seeking.