The SBA 7(a) loan program is most commonly used when there is a gap between the collateral available from the borrower and the collateral needed by the bank to secure the loan. “7(a) loans are the most basic and most used type loan of SBA's business loan programs. Under the loan program guaranty concept, commercial lenders make and administer the loans. The business applies to a lender for their financing. The lender decides if they will make the loan internally or if the application has some weaknesses which, in their opinion, will require an SBA guaranty if the loan is to be made. The guaranty which SBA provides is only available to the lender. It assures the lender that in the event the borrower does not repay their obligation and a payment default occurs, the Government will reimburse the lender for its loss, up to the percentage of SBA's guaranty. Under this program, the borrower remains obligated for the full amount due.”*
Click here to visit the Small Business Administration’s website and learn more about this program:
Since providing superior service to our business clients means more than just making loans, Capital Bank networks regularly with a wide range of non-profit organizations that provide entrepreneurial counseling, technical assistance, business planning classes and more. By keeping connected in these support organizations, Capital Bank is able to help its business clients access a full range of business support services at little to no cost.
*Source: U.S. Small Business Administration website