Understanding SBA 7(a) Loans from Veritex Bank Government Lending

For small businesses, securing financing can be crucial for growth and success, regardless of your location. One popular option for small businesses is the SBA 7(a) Loan Program. Whether you operate a business in a rural, urban, or suburban community, let’s explore how an SBA 7(a) loan can benefit your business.

What is the SBA 7(a) Loan Program?

The 7(a) loan program is the Small Business Administration’s primary program for providing financial assistance to small businesses with loans up to $5 million. These loans are not directly issued by the SBA, but rather by preferred lenders (mostly banks) and guaranteed by the SBA. Veritex Community Bank is an SBA-preferred lender and has closed more than three-quarters of a billion dollars in SBA loans as of 2024.

Key Features of SBA 7(a) Loans from Veritex Government Lending:

• Loan amounts: $500,000 to $5 million
• Flexible use of funds
• Longer repayment terms than conventional loans
• Lower down payments
• No collateral is required for some loans

What can an SBA 7(a) Loan be used for?

SBA 7(a) Loans can be used for various business purposes including working capital, equipment and real estate purchases, business acquisition, and refinancing existing debt. For a better idea of how your business could utilize a 7(a) loan from Veritex Government Lending, here’s a little more detail on 10 eligible uses of funds.

• Business acquisition: Buying an existing business or franchise.
• Business expansion: Funding growth initiatives like opening new locations.
• Real estate: Purchasing land or building for business use or renovating existing property.
• Debt refinancing: Consolidating existing business debts under more favorable terms.
• Equipment purchases: Buying machinery, vehicles, or other equipment needed for business operations.
• Furniture and fixtures: Purchasing items needed to outfit a business space.
• Inventory: Stocking up on products for sale or raw materials for manufacturing.
• Marketing and advertising: Promoting the business to attract customers.
• Working capital: To fund day-to-day operations, payroll, or inventory purchases.
• Seasonal financing: Covering cash flow gaps during slow periods.

This is just an example of how business owners can use SBA 7(a) Loan proceeds. However, 7(a) loans cannot be used for certain purposes, such as investing in rental real estate, paying off, or financing nonprofit activities.

What are the eligibility requirements for an SBA 7(a) Loan?

The SBA 7(a) Loan Program covers a wide variety of business industries, but there are a few key eligibility requirements. Loans must be for a for-profit business operating in the United States. Unlike USDA Rural Development Program Loans, 7(a) loans have no geographical restrictions, so long as the company is in the U.S. Qualifying businesses must meet the SBA size standards to be classified as a “small business.” The SBA size requirements consider market share, business income, number of employees, and other factors. Creditworthy borrowers must demonstrate a reasonable ability to repay the loan and have exhausted other financing options.

How quickly can I get an SBA 7(a) Loan?

Historically, Veritex Bank strives to close SBA 7(a) loans quickly. Our Veritex Government Lending team can move just as fast as a borrower can get the required documents and financial statements to a loan specialist. This means the business owner sets the pace.

What are the benefits of an SBA 7(a) Loan from Veritex Government Lending?

• Lower interest rates compared to other commercial loan options.
• Longer repayment terms (up to 10 years for working capital and 25 years for real estate is involved).
• Low down payments.
• Flexible use of funds.
• Refinance existing debt.
• Easier qualification as the SBA guarantee makes lenders more willing to approve loans for businesses that might not qualify for conventional funding.
• The SBA offers additional resources and support to borrowers, including business counseling and education.
• No balloon payments.
• Lower fees compared to other conventional commercial loans.

The SBA 7(a) Loan program can be an excellent financing option for eligible small businesses. By offering more favorable terms than many conventional loans, it aims to support small business growth and success.

Veritex Bank remains steadfast in its commitment to fostering economic growth and supporting small businesses. For more information about SBA 7(a) Loans from Veritex Government Lending, click here.