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888-778-1437 How the 7(a) Program Works Small business applies directly to a lender for financing. The lender reviews the application and decides if it can handle a loan on its own or if it requires additional support in the form of an SBA guaranty. The SBA guaranty assures the lender that if the borrower does not repay the loan, the Government will reimburse the lender for its loss, up to the percentage of SBA's guaranty. However, the small business borrowing the money remains obligated for the full amount due. If the lender does no approve loan, even with an SBA guaranty, SBA cannot force the lender to do so. It is very important for applicants to know and meet the lender’s criteria and requirements as well as those of the SBA. To be considered for an SBA loan, the applicant must be both eligible and creditworthy. Eligibility. To be considered for a 7(a) loan, applicants must meet certain requirements. These requirements are designed to be as wide as possible so the program can accommodate the most diverse variety of small business financing needs. Loan may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business. 504 Loan Program CDC/504 loan program is a long-term financing tool for economic development within a community. The 504 Program provides small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. A Certified Development Company (CDC) is a private, nonprofit corporation set up to contribute to the economic development of its community. CDC’s work with SBA and private sector lenders to provide financing to small businesses. 504 project includes: ►Loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost. ►Loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture with a junior lien covering up to 40 percent of the total cost; ►Contribution from the borrower of at least 10 percent equity. 504 loans must be used for fixed asset projects, such as: ►Purchasing land and improvements, including existing buildings, grading, utilities, parking lots and landscaping street improvements. ►Construction of new facilities or modernizing, renovating or converting existing facilities. ►Purchasing long-term machinery and equipment. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. Business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excessof $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the two preceding years.Each lender has its own lending and credit requirements. Generally, intermediaries require some type of collateral and the personal guarantee of the business owner.Disaster Assistance Loan Program: Low-interest loans to renters, homeowners, businesses of all sizes and most private non-profit organizations to repair or replace real estate, personal property, machinery and equipment, inventory and business assets that have been damaged or destroyed in a declared disaster. Yury Iofe, MBA Universal Business Structured Solution More educational resources by Yury Iofe: 888-778-1437

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