"You can't have everything. Where would you put it?" — Comedian Steven Wright

Effective December 22, 2000, a maximum loan amount of $2 million was established for 7(a) loans but the maximum amount guaranteed by the SBA was generally just $1 million. As of December 7, 2004 the maximum guarantee was raised to $1.5 million. Small loans (those under $150,000) carry a maximum guarantee of 85 percent. Loans greater than $150,000 are guaranteed at 75 percent. And in 2009 a 90 percent guarantee was authorized for certain types of loans.

Average time for completing a successful 7(a)loan guarantee package is about 25 hours. To get assistance in completing the paperwork, check with your prospective lender or any local municipal, county, or state economic development agencies in your area. Some of these groups will provide no-cost or low-cost assistance in preparing the application. Otherwise, consider engaging one of the various services or professionals that prepare loan packages. For a listing of these services, check your Yellow Pages under "Loans" or request a referral from your lender. The price range for loan packaging is approximately $1,200 — $5,000. To avoid unnecessary expenses, make sure that you have a bank commitment prior to engaging a loan guarantee packaging service. The bank will need only about one-half of the material and information necessary for the SBA requirements.

Loan proceeds may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business, including working capital; the purchase of inventory, machinery and equipment; and the construction, expansion and rehabilitation of business property. An SBA guarantee is especially helpful to small businesses who need long-term credit for these purposes, but cannot afford the large equity downpayment (often around 30 percent) required by conventional lenders.

Loan maturity varies according to the estimated economic life of the assets being financed and the applicant's ability to repay. In addition, the following maximum maturities apply:

The interest rate for guaranteed loans reflects prevailing market rates and can either be fixed over the life of the loan or can fluctuate with the market. The maximum interest rate permitted on guaranteed loans is the lowest New York prime rate (as published in the Wall Street Journal) plus up to 2.25 percent for loans with a maturity under seven years and up to 2.75 percent for loans with a maturity of seven years or more. Regular 7(a) guarantees prohibit the use of balloon payments ( a "balloon" is a large, final lump sum payment due after a set time period) or prepayment penalties (a charge for paying off a debt early and reducing the total interest paid on the loan) by the private lender.

The bill also empowers SBA to set up a Secondary Market Lending Authority that would make direct loans to broker-dealers that participate in the secondary market for SBA-guaranteed 7(a) loans. These broker-dealers would use the funds to purchase SBA-backed loans from commercial lenders, assemble them into pools and sell them to investors in the secondary loan market. This program may help address some of the issues facing the secondary market for SBA loans and may ultimately help SBA lenders make new loans to borrowers.

For complete and up to date details of the 7(a) program see this link.

In an effort to expedite processing of these larger loan applications, the SBA has established special programs for lenders.