What is the longest term on an SBA 7(a) loan?
Short answer
The longest standard term is 25 years, plus any reasonable construction or renovation period, for real estate. Working capital and most equipment are capped at 10 years. SOP 50 10 8.1, Appendix 17 and 13 CFR § 120.212 set the limits.
The maximum depends on what the money buys. SOP 50 10 8.1, Appendix 17, Para. A (p. 390) sets these limits:
- Working capital, inventory and intangibles, including goodwill: 10 years
- Equipment, fixtures and furniture: 10 years, or up to 15 years if the IRS asset class useful life supports it
- Real estate: 25 years, plus any reasonable construction or renovation period
- Leasehold improvements: 10 years, plus up to 12 months to complete the improvements
- Mixed-purpose loans: a blended maturity, or up to 25 years if 51% or more of the proceeds are for real estate
- Farm land and structures, 51% or more of proceeds: 20 years
- Farm machinery and equipment, 51% or more of proceeds: the useful life of the equipment, up to 15 years
- Change of ownership: 10 years of amortization, with only the real estate portion allowed up to 25 years on a blended basis
The maximum is not automatic
The term must be the shortest appropriate term based on the use of proceeds and the borrower's ability to repay (13 CFR § 120.212(a)). Lenders set the actual term within these limits, so it varies by lender.
Extensions count
13 CFR § 120.212(c) allows a maximum of 25 years, including extensions. The one addition is the period needed to finish construction or improvements on real estate.
Every 7(a) loan must have a stated maturity. SBA does not allow balloon payments.
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