SBA Loan Programs

What Are SBA Loans?

SBA loans are partially guaranteed by the U.S. Small Business Administration, which allows lenders to offer more favorable terms than conventional loans. The SBA doesn't lend money directly—approved lenders provide the capital, and the SBA backs a portion of the loan, reducing risk for the lender.

This structure results in lower interest rates, longer repayment terms, and lower down payment requirements compared to traditional bank loans.

SBA 7(a) vs. SBA 504

SBA 7(a) Loan

Max Amount: Up to $5 million

Uses: Working capital, equipment, inventory, acquisitions, refinancing, real estate

Terms: Up to 10 years (working capital), 25 years (real estate)

Down Payment: Typically 10-20%

Rates: Prime + 2-3% margin (variable or fixed)

SBA 504 Loan

Max Amount: Up to $5.5 million

Uses: Fixed assets (real estate, equipment, renovations)

Terms: 10, 20, or 25 years (based on asset life)

Down Payment: As low as 10%

Structure: 50% lender, 40% CDC/SBA, 10% borrower

Best Use Cases

Business acquisitions: Buy an existing business with favorable terms

Owner-occupied real estate: Purchase or refinance commercial property

Equipment purchases: Buy machinery, vehicles, or technology

Major renovations: Upgrade facilities or build out new space

Refinancing debt: Lower payments on existing high-cost loans

Long-term working capital: Fund growth when you need extended terms

Qualification Requirements

Eligibility Criteria

Operate as a for-profit business in the U.S.
Meet SBA size standards (typically under 500 employees for most industries)
At least 2 years in business (some exceptions for startups)
Personal credit score of 680+ preferred
Demonstrated ability to repay (positive cash flow)
Owner must invest equity (typically 10-20% down)
Owner must occupy at least 51% of real estate (for CRE purchases)

Documentation Needed

SBA loan application forms
Business and personal tax returns (3 years)
Financial statements (P&L, balance sheet, cash flow)
Business plan and use of funds narrative
Personal financial statement
Business licenses and formation documents
Lease or purchase agreement (if applicable)
Resumes of key management

Advantages vs. Disadvantages

Advantages

✓Lowest interest rates available
✓Longest repayment terms (up to 25 years)
✓Lower down payment requirements
✓Larger loan amounts than alternative lenders
✓Can be used for acquisitions and real estate
✓Builds strong business credit

Disadvantages

×Longer approval process (4-12 weeks typical)
×Extensive documentation required
×Personal guarantee required
×Collateral typically required
×Stricter eligibility requirements
×Not suitable for emergency funding

Timeline & Process

Pre-qualification (1-2 days)

Initial review of credit and business overview

Documentation & Application (1-2 weeks)

Gather and submit full documentation package

Underwriting & Approval (2-6 weeks)

Lender and SBA review and approval process

Closing & Funding (1-2 weeks)

Final documents, closing, and disbursement

Total timeline: 4-12 weeks depending on complexity and responsiveness. Our team helps expedite wherever possible.

Frequently Asked Questions

What's the difference between SBA loans and traditional business loans?

SBA loans are partially guaranteed by the government, allowing lenders to offer lower rates, longer terms, and lower down payments. Traditional business loans have higher rates but faster approval. SBA loans are best for established businesses with time for the process. Learn more in our SBA loan vs traditional business loan comparison.

How long does it take to get approved for an SBA loan?

SBA loan approval typically takes 4-12 weeks from application to funding. The process includes pre-qualification (1-2 days), documentation (1-2 weeks), underwriting (2-6 weeks), and closing (1-2 weeks). Faster processing requires complete documentation and responsive communication.

What credit score do I need for an SBA loan?

Most SBA lenders prefer a personal credit score of 680+ for SBA loans, though some may accept 650+. Higher scores improve approval odds and qualify for better rates. Business credit history and cash flow also factor heavily into approval.

Can I use an SBA loan to buy a business?

Yes, SBA 7(a) loans can be used for business acquisitions. You can finance up to $5M with terms up to 10 years for working capital or 25 years for real estate. The business must meet SBA size standards and you must invest 10-20% equity.

What's the difference between SBA 7(a) and SBA 504 loans?

SBA 7(a) loans are flexible and can be used for working capital, equipment, real estate, or acquisitions. SBA 504 loans are specifically for fixed assets (real estate, equipment) and use a structure with 50% lender, 40% CDC/SBA, and 10% borrower. 7(a) is more versatile, while 504 offers lower rates for fixed assets.