SBA 7a

What does it mean

SBA 7a is broad program from the Small Business Association (SBA) that is meant to encourage business by providing loan guarantees to banks to encourage lending.  Under the 7a program, the bank provides the financing and the SBA will provide the bank a loan guarantee ranging from 50-75% of the loan amount, which means that the SBA will reimburse the bank for 50-75% of any loss that occurs on the loan.


Why does it matter

SBA 7a is an effective risk mitigation tool available for a community banker.  The purpose of the 7a program is to close the gap between what a bank needs and what the borrower can offer.  Many times a new business will struggle to obtain bank financing due to some weakness (collateral, startup, cash flow, etc).  Without any outside assistance, many borrower’s would be turned down for a loan, but with a guarantee from the SBA, many banks are then willing to take the risk on the borrower because the potential downside is reduced due to the SBA guarantee.


Other Relevant Terms

Want to Master Banking's Favorite Ratio?

The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!

Get the Cheatsheet Now

Not Finding What You Are Looking For?

Let me know what terms, ratios or content you want to see covered.

Request Term or Ratio

Am I missing a key term or ratio? Let me know what you want to see covered.

Request Term/Ratio

Request Content

Do you have a topic idea you'd like to see covered?  Send it my way.

Request Content

Checkout Courses

Enhance your skills through a deeper understanding of your customers' businesses.

See Courses

A bit about me

Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities.  Win-win-win.