SBA 7(a) financing—versatile capital for growth and transitions
The SBA 7(a) program is the SBA’s flagship credit enhancement for small businesses. Its purpose is simple: help viable companies access bank financing on reasonable terms when conventional credit alone may fall short. Since 2009, Market Direct Capital has guided owners through 7(a) strategy, packaging, and lender selection—aligning requests with program rules and with Preferred SBA Lenders (PLP) to keep reviews moving and outcomes clear.
A brief history and why it exists
Created under the Small Business Act and refined through many economic cycles, the 7(a) program authorizes SBA to provide a partial guaranty to participating lenders. That guaranty supports prudent risk-taking, enabling longer terms, flexible collateral approaches, and financing of needs that are essential to operating companies. The focus is the business’s capacity to repay—not perfection in collateral.
What 7(a) can finance
7(a) is intentionally broad. It is frequently used for business acquisitions (including goodwill), partner buyouts, working capital, equipment, and for business owner-occupied real estate. When real estate is involved, the operating company must plan to occupy at least 51% of an existing building (or 61% upon completion for new construction). The program also supports refinancing of eligible business debt to improve cash flow. For mixed needs, 7(a) can consolidate multiple purposes into one amortizing facility.
Typical structure and terms
Loan amounts typically extend up to $5,000,000. Terms can run up to 25 years when real estate is the primary collateral and up to 10 years for business-only purposes (working capital, equipment, acquisition). Rates are lender-set within SBA guidelines. Equity contribution varies by use and risk profile—acquisitions and start-ups commonly include a buyer injection, sometimes paired with an eligible seller note on full standby. Collateral expectations are flexible; lenders evaluate global cash flow, management depth, and the overall strength of the request.
Where 7(a) shines
Acquisitions and buyouts. 7(a) allows goodwill, assets, working capital, and closing costs to be financed in a single structure. We size the request around realistic cash-flow assumptions so underwriting can focus on debt service coverage, not guesswork.
Growth working capital and equipment. Whether adding a production line or funding receivables, 7(a) pairs patient amortization with the economic life of the asset or need—helping preserve daily liquidity while you scale.
Rent Replacement and facility ownership. If you currently lease, we can model a transition to ownership under the 51%/61% occupancy rules. In eligible scenarios, total occupancy cost can stabilize, equity can build, and financing may reach up to 100% when criteria are met.
Process with Market Direct Capital
We begin with a concise, no-obligation pre-qualification to confirm fit, structure, and timeline. Then we prepare an underwriter-ready file: tight narrative, documented sources and uses, global cash flow and DSCR, and three-statement financial projections with supportable assumptions. Because we primarily work with PLP lenders, many decisions can move faster through delegated authority. We anticipate information requests, coordinate third-party items, and keep you current at each milestone.
The objective is a complete, defensible package—and a lender match whose credit box fits—so you spend less time in limbo and more time running the business.
Getting started
Share your goals and use of funds, and we’ll outline the most practical path. You’ll receive candid guidance on eligibility, a tailored checklist, and a timeline that accounts for third-party reports where applicable.