The SBA loan programs
The table sets out the four programs a small business is likely to use. All are made through lenders, not by the SBA itself, and all require that the business is for-profit, US-based, within SBA size standards, and unable to get the same financing on reasonable terms elsewhere.
| Program | Maximum | Typical use | Term | Rate basis | Time |
|---|---|---|---|---|---|
| 7(a) standard | $5,000,000 | Working capital, equipment, refinancing, acquisition, real estate | 10 years (25 real estate) | Prime + capped spread, about 10.5–15.5% | 30 – 90 days |
| 7(a) Express | $500,000 | Working capital, lines, equipment | Up to 10 years; lines up to 10 | Prime + capped spread, toward the top of the range | 2 – 6 weeks |
| 504 | $5,500,000 (CDC portion) | Owner-occupied real estate, heavy equipment | 10, 20 or 25 years | Fixed on the CDC portion; bank sets its own | 60 – 90+ days |
| Microloan | $50,000 | Working capital, inventory, equipment for new and small businesses | Up to 7 years | About 6 – 8% | 2 – 6 weeks |
What SBA loans cost
Interest on 7(a) loans is capped at the prime rate plus a spread that shrinks as the loan grows. With prime around 8.5 percent, most 7(a) loans price between about 10.5 and 15.5 percent, fixed or variable. A guarantee fee of zero to 3.75 percent of the guaranteed portion applies on a sliding scale by size and is usually financed into the loan; packaging and closing costs vary by lender. Prepayment penalties apply only to loans with terms of 15 years or more, in the first three years. The SBA calculator on this site shows payments over 10 and 25 years.
| Product | Typical amount | Time to fund | Cost (market range) | Minimums |
|---|---|---|---|---|
| SBA loan | $50,000 – $5,000,000 (7(a)); up to $50,000 for microloans | 30 – 90 days | Variable APR capped by SBA rules: prime plus 2.25% – 4.75% in most cases | 2+ years in business (some programs accept startups with strong plans); 650+ typical; 680+ preferred |
| Business term loan | $10,000 – $500,000 | 1 – 3 business days (online lenders) | APR roughly 8% – 45% depending on credit, revenue and term | 1 – 2 years in business; 600+ typical; 640+ for better pricing |
| Equipment financing | $10,000 – $2,000,000 (up to 100% of equipment cost) | 2 – 5 business days | APR roughly 7% – 30% | 6 months – 2 years (equipment secures the loan); 600+ typical; strong equipment can offset weaker credit |
| Business line of credit | $10,000 – $250,000 | 1 – 3 business days to open; draws often same day | APR roughly 10% – 60%; some lenders price as a weekly fee on the drawn balance | 6 – 12 months in business; 600+ typical |
Who qualifies
Most SBA lenders want two or more years in business with filed returns showing the business can cover the proposed payment about 1.25 times, personal credit around 650 and up, an owner equity stake of roughly 10 percent for acquisitions and startups, no recent bankruptcy or default on government debt, and owners who are US citizens or permanent residents. Collateral is taken where available but lack of collateral alone should not cause a decline. Some Express and microloan lenders fund businesses under two years with a strong plan and personal credit.
Assemble before applying
SBA application package
- Business tax returns, two to three years
- Personal tax returns for each owner with 20% or more
- Year-to-date profit-and-loss and balance sheet
- Twelve months of business bank statements
- Debt schedule with balances and payments
- Business plan or use-of-funds narrative with projections
- Resumes of owners and key managers
- Formation documents, licences, leases
- Collateral list; purchase agreement for acquisitions
- SBA forms 1919 and 413 (personal financial statement)
How long it takes and how to speed it up
Thirty to ninety days from a complete package for standard 7(a); two to six weeks for Express and microloans; longer for 504 and any loan needing an appraisal or environmental report. The file that moves fastest is complete on day one, answers lender questions the same day, and has returns that reconcile with the financial statements. A funding specialist who knows which lenders are actively making SBA loans for your size and industry avoids the two most common delays: a lender that sits on the file, and a package that goes back for missing items.
When an SBA loan is, and is not, the right choice
It is the right choice for long-lived investments where the annual cost matters more than speed: a second location, a practice or business acquisition, real estate, major equipment, or refinancing expensive debt into a ten-year payment. It is the wrong choice when the money is needed in days, when the business is too young or not yet profitable on paper, when the amount is small enough for a line of credit, or when the owner will not provide a guarantee and available collateral. In those cases a conventional product funds now and the SBA loan can follow as a refinance.