1 day
The 7(a) Loan Program is an attractive program for small businesses that need financing and don’t have funds to make a sizable down payment on a loan. Here’s a step-by-step process detailing how the loan process works. If you have any questions, an MCDC representative will be happy to guide you.
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1-2 days
Speak with an MCDC LSP representative.
An LSP Processor will reach out to you to ask a few more questions and possibly ask for additional information. LSP Processor will determine what loan program best fits your financing needs. -
2-4 days
LSP Processor will review preliminary checklist information.
LSP Processor will review checklist items and perform a preliminary loan analysis to determine the loan viability. -
1-2 days
Lender referrals.
MCDC will provide a lender referral that will work best for you (if you do not already have a lender). -
2-4 weeks
The lender and MCDC will collect information and documentation from you for their credit analysis and approval.
Another meeting may be needed to collect any outstanding items/forms. -
5-10 days
MCDC submits your loan package to the SBA & receives the SBA approval.
If approved, an authorization document will be provided to you by your lender. -
3-4 days
Lender, MCDC, and SBA review appraisal and environmental reports.
Lender will submit reports to SBA for final sign off. -
1-3 weeks
Close your loan with the lender and receive your funds.
Lender will work with you to get all due diligence around to document the closing documents and close the loan.
Frequently Asked Questions
What is the biggest misconception about SBA loans?
How much of a down payment will be needed?
Can you have more than one SBA loan?
How long does it take to get an SBA loan?
What is the most common type of SBA loan?
The biggest misconception borrowers have about SBA loans is that obtaining an SBA loan is a lengthy process due to the amount of documentation that is required, and the amount of time needed to review an SBA loan request. At MCDC, we have a seasoned staff who knows the process and have experience in the SBA industry. Therefore, you should be able to get an SBA loan in a fast and efficient manner when working with an MCDC supported lender. To contact an MCDC lender please contact us at (833)-GET7ALOANS or (833) 438-7256 and ask for the 7(a) Lending Department.
The exact amount of down payment depends on the type of SBA loan you are looking for and the lender that is reviewing the request. For SBA 7(a) loans, a down payment is typically in the 10 percent range. In some cases, the SBA may require the borrower to provide a slightly higher down payment or in some cases it could be less. New businesses usually require more of a down payment then existing businesses.
Yes, a borrower can have multiple SBA loans over the course of the lifetime of a business, provided a business meets the SBA’s and the lender’s eligibility requirements for every loan received. However, the combined amount of those loans must not exceed SBA program borrowing limits, which varies based on the type of SBA loan. For example, the borrowing limit for SBA 7(a) loans is $5 million to any one borrower and its affiliates.
The approval process for an SBA loan depends on the type of loan you are applying for and the type of lender you are using. For an SBA 7(a) loan, the turnaround time can be as little as 30 - 45 days if you use an experienced lender. However, the process can take much longer if you work with a lender that doesn’t have a good support staff that understands the SBA process. MCDC helps support lenders to ensure everyone is well informed of the process and what is needed for a quick approval.
By far, the most popular type of SBA loan is the SBA 7(a) program, which allows for the widest variety of loan uses and has the most flexible underwriting guidelines. The SBA 7(a) program accounts for more than 60,000 small business loans each year and is the SBA’s flagship loan product. It provides loans to qualified small and medium-sized businesses in amounts of up to $5 million. It can be used towards a wide range of business purposes, such as commercial real estate purchases and refinancing, buying a business, renovations, purchasing new or used equipment, expanding a business and refinancing existing debt.
The 504 Loan Program is an excellent program for small businesses that need financing to assist them in expanding their business. Here’s a step-by-step process of how the loan process works. If you have any questions, contact your local MCDC Loan Officer. One of our loan experts will be happy to guide you.
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1 day
Are you qualified for an SBA loan?
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1-2 days
Speak with an MCDC loan officer.
A loan officer will reach out to you to ask a few more questions and/or ask for additional information. They will then determine what loan program best fits your financing needs and send you a preliminary checklist. -
2-4 days
A loan officer will review preliminary checklist information.
The loan officer will review the checklist items and perform a preliminary loan analysis to determine the loan viability. -
1-2 days
MCDC will provide lender referrals.
MCDC will provide a lender referral that will work best for you (if you do not already have a lender). -
2-4 weeks
Credit analysis and approval.
The lender will perform a credit analysis and approval. -
3-4 days
Underwriting.
If approved by the lender, MCDC will begin the underwriting process. -
1-2 days
MCDC board and approval.
The MCDC board will vote on your application. -
4-5 days
Loan package is submitted to the SBA.
If your loan is approved, an authorization letter will be mailed to you and an MCDC loan officer will meet with you to review the SBA approval. -
3-4 days
Appraisal and Environmental review.
Your lender, MCDC and SBA review the appraisals and environmental reports. -
1-3 weeks
Close your loan with the lender and receive your funds.
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1-3 weeks
Close and fund the SBA loan with MCDC.
Once your project is complete, you will close the MCDC loan.
Frequently Asked Questions
What are the advantages of an SBA 504 loan?
What are the job creation requirements?
What cannot be financed with SBA 504?
What kind of equipment can be financed with a 504 loan?
How is a construction project managed?
What is a certified development company (CDC)?
Are personal guarantees required?
Is my business eligible for a 504 Loan?
How do I get the process started?/How do I apply?
What are the fees?
Low Down Payment
- 504 Loans require between 10% and 20% down. Small businesses receive up to 90% financing, allowing them to preserve working capital for business expansion.
- Low fixed rate 504 Loans utilize fixed rates that are usually 1-2% under conventional financing.
- Low monthly payments.
- No balloon payment.
- Collateral is typically only the building or equipment being financed.
Generally, the SBA requires a project to create or retain one new job for each $75,000 of a debenture or $120,000 for manufacturing. However, projects with a high community impact and low direct job impact may be considered when achieving one of several Public Policy Goals of the SBA.
Investment real estate, working capital, inventory, titled vehicles, supplies, training, marketing, start-up costs, and uniforms cannot be financed with an SBA 504 loan.
Long-term machinery and equipment with a useful life greater than 10 years (e.g., a printing press). If your project involves a building, we can finance most of your other furniture and equipment that is housed in the building such as desks, chairs, tables, computers, shelving, etc.
The SBA does not manage any construction risk. The lender is required to manage the construction process. The SBA does provide an up-front commitment to give the lender comfort during the process. Once the construction is complete, the MCDC can move to a final closing.
Certified Development Companies (CDC) serve as the conduit to the SBA for the 504 Loan Program. Small Businesses must utilize a CDC to access the loan program.
Guarantees are required of all individuals owning 20% or more of the operating entity or the real estate holding company.
Businesses with a tangible net worth of no more than $20 million and average income, after taxes, of no more than $6.5 million for the last two years are eligible for financing under the SBA 504 program.
Applicants must also:
- Be organized as a "for profit" organization.
- Be located in the United States.
- Be able to demonstrate a need for the desired credit.
Contact the MCDC and we will discuss the project to determine eligibility; then, we will forward a checklist of information needed to begin the approval process.
When your loans close and your SBA 504 loan is funded, you'll incur various fees totaling approximately 2.65% of the SBA loan amount, plus an attorney closing fee of $2,500. These fees are financed within the SBA loan proceeds, so they are not out-of-pocket expenses.