How 7(a) Loans Work

Since 7(a) loans come from Welkin Capital Group (or other commercial lenders), not the Government, a small business needs to apply directly to a commercial lender like Welkin for financing. The lender then reviews the application to decide if it merits a loan on its own or if it requires additional support in the form of a guaranty from the Small Business Administration.

An SBA guaranty assures the lender that if the borrower does not repay the loan, the Government will reimburse the lender for its loss, up to the percentage of SBA‘s guaranty. However, the small business borrowing the money still remains obligated for the full amount due.

If a commercial lender like Welkin is not willing to provide the loan, even with an SBA guaranty, the SBA cannot force the lender to do so. Therefore, it is imperative for applicants to be prepared when they approach a lender to meet all the lender’s and the SBA‘s criteria and requirements. The applicant must be both eligible and creditworthy to be considered for an SBA-backed loan.

See also 7 a Loan Program and 7(a) Loan Requirements.