SBA 7(a) Program Overview
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Summary
SBA 7(a) loans are the most common type of SBA loan. 7(a) loans facilitated through Legis Commercial Capital (LCC) will be primarily used for the acquisition or refinance of commercial real estate and for business acquisitions. Other SBA eligible uses of proceeds such as working capital, machinery and equipment, furniture and fixtures, and building improvements can be considered by LCC. Projects are secured by a 1st Deed of Trust/Mortgage on commercial real estate, or UCC-1 lien filing on business assets meeting SBA qualifications, having a maximum Loan to Value of 90%, depending on collateral type.
Typical Project Structure
• 75% to 90% LTV
• 10% to 25% Equity Injection
Maximum Loan Amount
• $5,000,000
Maturity and Amortization*
• Real Estate – Up to 25 years
• Business Acquisition – Up to 10 years
• Equipment Acquisition – Up to 10 years
• Debt Refinancing – 7 to 10 years
• Permanent Working Capital – Up to 7 years
*(Blended maturity and amortization will be applied depending on final structure as determined by SBA guidelines)
Maximum LTV
• Multi-Purpose Real Estate – Up to 90% LTV
• Limited or Special Purpose Real Estate and Business Acquisitions – Up to 80% LTV
SBA 7(a) Eligible Use of Proceeds
• To purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities.
• To acquire equipment, machinery, furniture, fixtures, supplies, or materials.
• For long-term working capital, including the payment of accounts payable and or for the purchase of inventory.
• To refinance existing business indebtedness that is not already structured with reasonable terms and conditions.
• For short-term working capital needs, including seasonal financing, contract performance, construction financing, export production, and for financing against existing inventory and receivable under special conditions.
• To purchase an existing business.
SBA 7(a) Ineligible Use of Proceeds
• To effect a partial change of business ownership or a change that will not benefit the business.
• To permit the reimbursement of funds to any owner, including any equity injection or injection of capital for the business’s continuance until the loan supported by the SBA is disbursed.
• To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow.
Eligible Property Types
• Office: Professional, Condominium, Medical, Dental, and Veterinarian.
• Industrial: Heavy and Light Manufacturing, Warehouse and R&D Flex
• Retail: General
• Special Use: Assisted Living Facilities, Adult Care, Day Care Facilities, Restaurants, Funeral Homes, Hotels/Motels.
Rate Option / Fees
Interest rates are generally adjustable based loans, tied to the Prime Index rate. Maturities up to 25 years are available based on use of loan proceeds. Fees are based on the total loan request and calculated on the guaranteed portion of the loan.
Underwriting Requirements
• Prior Ownership and Management Experience
• Minimum FICO of 680
• All loans are Full Recourse and require the personal guarantee of any and all individuals or entities holding 20%
ownership interest or more.
• 1.25x Minimum Debt Coverage Ratio (DCR) for the most recent FYE and Interim period is required.
Occupancy
The subject property must be occupied by a minimum of 51% by the Small business Concern (60% for new construction).