Most owner-managed for-profit businesses are eligible for the program. However, the SBA does provide a list of ineligible businesses. Examples of ineligible businesses include those involved in real estate speculation (e.g., apartments and retail centers), lending (e.g., factoring), and illegal or morally questionable activities.

An applicant who has a loan request that does not quite meet the bank’s conventional lending policies. This may be due to insufficient collateral, lack of historical cash flow, limited equity injection or a similar deficiency. Note: The SBA guarantee allows the bank to overcome certain deficiencies, but it does not make a bad loan good.

Proceeds may be used for a wide range of business purposes—including, but not limited to—real estate acquisition or refinancing, working capital, business acquisition, inventory acquisition, startup costs, equipment acquisition, partner buyouts, and construction/leasehold improvements.

Cadence Bank typically prices SBA 7(a) loans at a spread over the Wall Street Journal Prime Rate and adjusts quarterly. Pricing typically ranges from Prime + 1.50% to Prime + 2.75%, depending on the characteristics of the transaction. SBA prohibits lenders from charging a loan origination fee; however, the bank is allowed to charge a packaging fee (typically $2,500 per transaction).

No. The SBA Department follows the bank’s loan policy regarding personal credit history.

Yes. The borrowing entity must occupy at least 51% of the building being financed.

An equity injection is typically required. The required percentage will vary depending on the transaction’s overall strength, but 20% is a good rule of thumb. Factors such as seller financing or additional collateral can lower this percentage. It is not uncommon for a business acquisition or expansion scenario (where cash flow is proven and consistent) to have a 10% equity injection requirement.

SBA 7(a) loans are not limited to the availability of collateral. However, the SBA does require that we pursue all available collateral until a loan is either fully secured or all available collateral has been exhausted. Requests with strong cash flow, a strong guarantor or a proven franchise brand may be acceptable on a largely unsecured basis (just a UCC-1 filing against business assets). Note: It is common for equity in a guarantor’s personal residence to be pledged as part of the available collateral.

As with any loan product, the customer’s participation is key to a timely closing. Assuming a proactive and organized customer, 30-45 days from receipt of a complete package is a reasonable expectation.

We will consider opportunities in all 50 U.S. states.