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.
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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.
