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What Are Fixed Assets in the SBA 7(a) Program?
The SBA talks about fixed assets as tangible and long term, meaning they can’t be converted into cash easily. Things like real estate and land, certain equipment, and other specialized property are considered fixed assets.
Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by an SBA LenderClick Here to Get Quotes!Fixed assets are tangible and long term, meaning they can’t be converted into cash easily. Things like real estate and land, certain equipment, and other specialized property are considered fixed assets. Lenders will usually require fixed assets as collateral for providing loans. Fixed assets are also called tangible assets.
Fixed Assets and Collateral for SBA Loans
You fixed assets can be used as collateral when necessary. Traditional lenders like banks and credit unions will usually require you to put forward collateral when receiving a loan, but the SBA has different requirements. For the SBA 7(a) Standard Loan, the SBA doesn’t have any requirements regarding collateral. Individual banks may set their own collateral requirements, however, so it’s important to get that information from your lender.
Working with an SBA preferred lender is a good way to ensure they follow the best practices laid out by the SBA. While it may not guarantee that you won’t have to put forward collateral on your SBA loan, it certainly won’t hurt.
To learn more about the SBA 7(a) loan program or to get a free quote, simply fill out the form below.
Related Questions
What are the eligibility requirements for the SBA 7(a) program?
The SBA 7(a) program has the following eligibility requirements:
- The business must be officially registered as a for-profit business and must be operating legally.
- The business owner cannot be on parole.
- The business must have fewer than 500 employees and less than $7.5 million revenue on average each year for the past three years.
- The business must have a net income of less than $5 million (after taxes and not counting carry-over losses) and a tangible net worth of less than $15 million.
- The business owner must show they are investing their own time and money into the business, having “invested equity.”
- The business must be physically based in the United States and must be doing business with the U.S. and its territories.
- The business must be in an SBA-eligible industry (speculative, illegal and non-profit businesses are not eligible).
- The business owner must show they have already tried and failed to get funds from other financial lenders, fully exhausting non-SBA loan options.
- The business owner must prove they have a sound business purpose for the loan they are requesting, and that their intended funds usage is approved by the SBA.
- The business owner must prove they are not delinquent on any existing debts to the U.S. government (taxes, student loans).
For more information, please visit www.commercialrealestate.loans/sba-7a and www.sba7a.loans/eligibility-and-qualifications-for-the-sba-7a-loan.
What types of fixed assets can be financed through the SBA 7(a) program?
The SBA 7(a) program can finance a variety of fixed assets, including real estate, equipment, and inventory. The SBA 7(a) program is a great option for businesses looking to finance the purchase of fixed assets, as it offers competitive rates and flexible terms. The SBA 7(a) program also offers loan amounts up to $5 million, so businesses can finance larger purchases with ease.
For more information on the types of fixed assets that can be financed through the SBA 7(a) program, please visit https://www.sba.gov/funding-programs/loans/7a/eligibility.
What are the advantages of financing fixed assets through the SBA 7(a) program?
The SBA 7(a) program offers several advantages for financing fixed assets. These include flexibility in underwriting, often lower interest rates than other comparable financing options, long loan terms (up to 25 years for real estate, 10 years for equipment, and 10 years for working capital or inventory), and flexible collateral requirements. Additionally, lenders are prohibited from charging certain fees, including insurance service fees, add-on interest charges, legal service fees (with some exceptions), and broker referral fees. For more information, please visit https://www.commercialrealestate.loans/sba-7a.
How long does it take to get approved for the SBA 7(a) program?
The approval time for an SBA 7(a) loan will depend on how much experience your lender has with processing this type of financing. By choosing your lender carefully, you may be able to have your loan application processed more quickly. Here are a few different ways the SBA 7(a) loan is processed:
SBA 7(a) Loan Processing Type Approval Time Standard 7(a) Loan Processing 7-10 business days Certified Lenders Program (CLP) Processing 3 business days Preferred Lenders Program (PLP) Processing 24 hours or less The Certified Lenders Program (CLP) Processing is the fastest way to get approved for the SBA 7(a) program, taking only 3 business days.
What documents are required to apply for the SBA 7(a) program?
To apply for the SBA 7(a) program, you will need to provide the following documents:
- SBA Form 1919 (borrower information form)
- SBA Form 912 (statement of personal history)
- SBA Form 413 (personal financial statement)
- Financial statements, including a balance sheet, profit and loss, and income projection
- Agreement to purchase the business
- Letter of intent to buy the business
- Business tax returns for the past three years
- Any outstanding business debt
- Long-term business contracts
- Documentation of business assets
- Business lease agreement
- Incorporation documents and/or business license
- Business plan
In addition, the SBA will usually order an independent business appraisal to give lenders an idea of what the true value of the business is.
The SBA allows applicants to get help (for example, from a lawyer or a translator) filling out the application paperwork, but your lender will be required to submit information about who gave you help to the SBA, so you’ll need to document who this person is as well.