Finalized in December 2017 and effective January 1, 2018, the U.S. Small Business Administration (SBA) has updated its standard operating procedure (SOP) relating to equity requirements for its 7(a) loan program, lowering them from 25% to 10%.
The 7(a) loan program is the SBA’s most popular, allowing small business borrowers to obtain up to $5M in loans to fund startup costs, which include the purchase of new land (including construction costs), repairs to existing capital, and purchasing or expanding an existing business. In addition to lowering the equity requirements for the 7(a) program, the SOP update also streamlines and improves the administration of SBA 504 Loans, or the Certified Development Company program, which provides long-term, fixed-rate financing for the acquisition of fixed assets (frequently real estate, buildings, and machinery) necessary for small businesses to grow.
As buyers’ brokers for Florida Keys commercial real estate investors, we have found the SBA route a good fit for certain buyers and can match buyers with Preferred SBA Lenders.