Great Plains Development, Inc. (GPDI) packages SBA 7(a) guaranteed loans.  The 7(a) Loan Guaranty Program is one of SBA’s primary lending programs.  It provides a guaranty to banks for loans to small businesses unable to secure financing on reasonable terms though normal lending channels. 

 Eligibility

• A business is usually eligible if:

  • The purpose of the loan is to start or grow a business.

  • The existing business employs not more than 500 people; has average annual sales for the preceding three years not exceeding $6 million, including business affiliates; the business and its owners have good credit; and the business owners are of good character.

• Owner equity contribution is important.

Projects Financed

• Financing is available for most business needs such as inventory, working capital equipment, land, buildings and refinancing. However, restructuring of existing debt must meet SBA requirements.

Loan Amount & Guaranty

• Gross Loan Amount of $2,000,000 with the maximum guaranty of $1,500,000.   The maximum SBA guaranty on a loan up to an amount of $150,000 is 85%; for loans above $150,000 the maximum SBA guaranty is 75%. 

Interest Rate

• Fixed or variable.  Rate cannot exceed 2 ¾ % over minimum Wall Street Journal prime as of the date application was received on a loan of 7 years or longer.  On a loan of less than 7 years, maximum would be a 2 ¼ % over minimum Wall Street Journal prime.  If variable, rate fluctuations may be monthly, quarterly, semi-annually, annually, etc.  

• If loan is up to $50,000 there are exceptions to the above limits on interest rate:

o        Loans between $25,000 and $50,000 can be 1% higher than the limits shown above.

o        Loans less than $25,000 can be 2% higher than the limits shown above.

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Fees

• Guaranty Fee - Lender may pass this fee on to the borrower by either direct billing or in the loan proceeds.

  • Term of loan over one year -

    • If the total loan amount is less than or equal to $150,000, the one time fee is 2% of the guaranteed amount. Lender can retain 25% of this fee.

    • If the total loan amount is greater than $150,000 up to $700,000, the one time fee is 3% of the guaranteed amount.

    • If the total loan amount is greater than $700,000, the one time fee is 3.5% of the guaranteed amount.  And, an additional .25% for any guaranty that exceeds $1,000,000.

  • Term of loan less than 12 months –

    • One time fee is one quarter of one percent (1/4 of 1%) of the guaranteed portion of the loan.

• Other Fee -  The lender pays a .545% per annum fee on the outstanding guaranteed balance of each loan approved after October 1, 2004.  The fee is paid monthly with the 1502 reporting form.  The fee can only be passed on to the borrower through the interest rate and not directly billed.

• GPDI Packaging Fee – Paid by applicant

  • $500 upfront fee for total projects of $150,000 or less.

  • $750 upfront fee for total project greater than $150,000. 

   

Repayment

• Loan maturities are based on the ability to repay, the purpose of the loan proceeds, and the useful life of the assets financed. 

  • Maximum loan maturities – 25 years for real estate and equipment, and generally 7 years for working capital.

• There is a prepayment penalty for loans with maturities greater than or equal to 15 years.

 Collateral

• To secure the loan, the borrower must pledge available business and personally owned assets.  Loans are not declined when inadequate collateral is the only unfavorable factor.

• All owners of 20 percent or more are required to personally guarantee the loan.

Please note that above information was gathered from SBA publications and website.  Terms and conditions are subject to change.

Contact a GPDI representative for more information.

To begin the process, download the GPDI loan application here.

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