SBA 7(a) Part III – Frequently Asked Questions During the SBA 7(a) Application

If you’re interested in applying for an SBA 7(a) loan, you’ll need to first know if your business qualifies. 

To qualify for an SBA Working Capital Loan, your business must be: 

• In operation for at least 1 year as a for-profit business 
• US-based location and operations 
• Owner supported / owner funded 
• Eligible per the SBA’s requirements 
• Loan size determined by average annual revenue of the business and FICO score

For more information on eligibility, please visit our Part 1 Article in this 3 part series.

Based on the size of loan that you are requesting, here are all documents that will be required during the SBA 7(a) loan underwriting process with NEWITY:

Documents for Businesses in Operation for 1+ Years

Loan amounts of $17,500 to $50,000

1. Last two years of business tax returns
2. Your latest personal tax return for majority owner(s)
3. The last three months of business bank statements

Loan amounts of $50,001 to $500,000

1. Last two years of business tax returns
2. Your latest personal tax return for majority owner(s)
3. The last three months of business bank statements
4. Your business debt schedule if applicable

Note, if you haven’t filed your most recent taxes, you will need to provide these documents:

1. 2023 Proof of Extension
2. Full Year 2023 Profit & Loss Statement

Other Business Documents

1. Corporate Bylaws / Operating Agreement if applicable
2. Active Lease Agreement if applicable
3. Schedule of Furniture, Fixtures and Equipment if applicable

Affiliated Business(es)

1. Most Recent Affiliated Business Tax Return if your business(es) meet SBA affiliation criteria

Majority Owner is not a U.S. Citizen

1. 1. If a 20% or more owner is not a U.S. citizen, but is a lawful permanent resident, the following are required:   
      1. Copy of Permanent Resident Card (front and back)
      2. USCIS Verification & Authorization Letter   
         • Note: Please note that once your application is submitted, we will provide you with the USCIS Verification & Authorization Letter for you to complete. Please physically sign this form with blue ink and return to us.

Documents for Startup Businesses

All loan amounts

1. Business bank statements for the previous two to three months, as available
2. Your latest personal tax return for majority owner(s)
3. Your business tax return, if filed

Note, if you haven’t filed your latest personal tax returns, please provide your previous year personal tax returns and your latest year’s proof of extension.

The interest rate for SBA 7(a) working capital loans is variable. It is based on the Wall Street Journal (WSJ) Prime Rate, plus 2.75%. As of March 22, 2023, the current prime rate is 8.00% in the U.S., according to The Wall Street Journal’s Money Rates table. 

At the current WSJ Prime Rate of 8.00%, NEWITY’s 7(a) loan interest rate can be calculated as 8.00% + 2.75% = 10.75% per annum. 

The interest rate on your funded loan will adjust on the first day of every calendar quarter based on the current Wall Street Journal (WSJ) Prime Rate + 2.75%. If there was no rate change during the previous quarter, your rate will remain the same. Please review the Payment Terms section of SBA Note Form 147 included in the Closing packet that will be sent to you for more details.   

Yes. If you have not filed your 2022 tax return, you will need to provide the IRS proof of extension and the previous three years returns. For example, if you have not filed your 2022 tax return as an individual or business, you may provide the IRS proof of extension, proof payment for any taxes owed and the 2019 – 2021 tax returns. 
 

a. April 18, 2023 – Tax filing deadline. After this date, we will need to review your 2022 return or the extension with proof of payment for both the business and the personal taxes.

b. July 1, 2023 – 6 months after the fiscal year, the SBA requires 2022 transcripts.

c. October 15, 2023 – You will need to submit your 2022 return and your tax transcripts will be required.

Alongside our partner, Northeast Bank, we offer SBA 7(a) Working Capital Loans of up to $250,000. Loan qualification requirements will vary by loan amount request, but are generally determined by the historical revenue of your business.

SBA requires collateral for loans greater than $25,000. These loans are secured with a lien on all of the Applicant’s fixed assets.

a. You can expect a decision on your application within approximately 2-3 business days after the Underwriter completes their review of your application. The timeframe will depend on the accuracy and completeness of your application and supporting documentation.

b. If your application is approved, you can expect funding in your account within approximately 10 business days. During the application journey on the Funding Account Information page, please ensure you enter your correct routing and account number to prevent any delays.

One of the key advantages of 7(a) working capital loans is that they can be used to cover a wide variety of expenses. Funds may be used on the following categories:
Payroll – This includes salaried, hourly, part-time, and 1099 employees.
Operating Expenses – This includes short-term expenses such as marketing, membership programs, inventory purchases, and day-to-day expenses.
Rent Utilities – This includes all utility expenses incurred by a business.
Note: The funds from the loan may be used in one category or may be split among multiple categories.