SBA 7(a) loans

The SBA 7(a) loan program provides loans of up to $5 million to qualified small businesses in the U.S. These loans may be used for a variety of purposes, and offer attractive interest rates and terms for those who qualify. Some program requirements changed in 2025 and 2026. SBA rules and guidance are subject to change, and lenders may apply additional requirements. Find out whether and how an SBA 7(a) loan can help your business.

What is an SBA 7(a) loan?

The SBA 7(a) loan program is the U.S. Small Business Administration's flagship lending program. It's designed to help small businesses that qualify for financing but struggle to get similar loans from traditional lenders. It includes several types of loans, such as SBA Express Loans and the newer Manufacturers’ Access to Revolving Credit (MARC) Loans.

The SBA doesn't make these loans directly. Instead, it guarantees a portion of the loan for participating lenders — typically 75% to 85% of the loan amount — making them less risky and more appealing to banks and credit unions.

The maximum loan amount is $350,000 to $5 million depending on the type of loan, and funds may be used for a variety of business purposes, including working capital needs, commercial real estate, equipment, or even refinancing certain debts. 

Interest rates are often competitive and repayment periods can be as long as 10 to 25 years, depending on the type of loan and how the funds are used.

SBA loans work a lot like bank loans, and many are made by banks and other approved financial institutions. 

How SBA 7(a) loans compare to traditional bank loans

Both SBA loans and conventional bank loans come from similar institutions, but there are key differences. 

• SBA loans follow specific federal requirements that lenders must meet. These rules determine eligibility, what you can use the funds for, and how the loan gets structured.
• Conventional bank loans give lenders more flexibility in their underwriting standards and terms, but they often require stronger financials, more collateral, and larger down payments.

As of June 1, 2025, several key changes were made to the guidelines for the 7(a) loan program. We will discuss several in this article, including:

• A revised credit requirement, including a higher FICO SBSS score for certain loan programs. (This mandatory requirement is eliminated as of March 1, 2026. More on that in a moment.)
• Loans may only be made to businesses owned by U.S. citizens, lawful permanent residents (LPRs a.k.a. “green card holders”), naturalized citizens, or U.S. nationals with minimal exceptions (see below). 
• No money down loans to startups are not allowed; 10% owner equity injection is required.

Pros and cons of SBA 7(a) loans

Current SBA 7(a) loan rates 

Interest rates on 7(a) loans are considered competitive and lower than what borrowers can get elsewhere. Loans may carry a fixed rate or variable interest rate. Variable rate loans will be tied to the prime rate or the SBA Optional Peg rate 

While lenders negotiate interest rates with borrowers, they cannot exceed the SBA’s maximum interest rate. Unlike other small business loan interest rates, a default rate is not allowed. That means the borrower’s rate won’t skyrocket if they miss a monthly payment. 

*Maximum rates as of January 5, 2025 based on 6.75% prime rate. For SBA 7(a) loans, lenders also have the option of using the SBA Peg Rate or the Secured Overnight Financing Rate (SOFR) as the base rate.

All 7(a) term loans (loans for a fixed amount) can be structured with interest-only payments at the front end of the loan, giving your business more cash flow flexibility during the early stages.

Use the SBA loan calculator below to estimate your costs. 

Types of SBA 7(a) loans

The 7(a) program includes several loan types under 13 CFR § 120.200, each designed for specific business situations.

There are several types of SBA 7(a) loans: 

The qualification requirements for each are largely similar, though there may be certain requirements that go with each type of loan. For example, to qualify for an International Trade Loan, you’ll have to demonstrate loan proceeds will be used to significantly expand an existing export market or develop new export markets, or that your business has been hurt by import competition and proceeds will be used to improve your competitive position. 

Standard 7(a) loans

Standard 7(a) loans are available for loan amounts greater than $350,000, and up to $5 million. The maximum repayment term for working capital or inventory is up to 10 years, and while the maximum loan term for equipment is up to 10 years, it can extend to 15 years if the useful life of the equipment supports it. For real estate, the maximum term is up to 25 years. 

7(a) Small loans

Small loans are 7(a) loans of $350,000 or less. Repayment terms are generally up to 10 years for working capital and equipment, and up to 25 years for real estate. These loans make sense for smaller financing needs with solid credit. Loans of $50,000 or less don't require collateral.

SBA Express loans

SBA Express loans speed up the process by allowing lenders to use their own forms and make the credit decision without prior SBA review (delegated authority). They provide up to $500,000. While lines of credit and working capital loans are limited to 10 years, term loans for real estate may go up to 25 years. This makes them a popular choice for businesses needing faster decisions.

Export Express loans

Export Express loans support businesses engaged in or preparing for exporting, with loans of up to $500,000. These loans suit companies looking for reduced documentation requirements and faster decisions. Repayment terms depend on the use of funds: up to seven years for lines of credit, 10 years for equipment and working capital, and 25 years for real estate.

Export Working Capital loans

EWCP loans are short-term lines of credit that help exporters finance specific export orders. You can access up to $5 million with terms typically lasting one, two, or three years (maximum 36 months). They work well for seasonal exporters or businesses needing to finance single large transactions or revolving lines of credit against export inventory and receivables.

International Trade loans

International Trade loans help businesses expand export markets or strengthen positions affected by import competition, offering up to $5 million. Repayment terms depend on the use of proceeds: generally up to 10 years for working capital and equipment (15 years for some equipment), and up to 25 years for real estate. 

To qualify, you must demonstrate that the loan will improve your competitive position and either expand export markets or help you adapt to import competition.

CAPLines

CAPLines offer four types of short-term working capital lines of credit with up to $5 million available. These effectively address cyclical, seasonal, or recurring working capital needs. While Working Capital, Contract, and Seasonal CAPLines offer terms up to 10 years, Builders CAPLines are limited to five years (plus construction time).

Community Advantage

Community Advantage is a program that allows approved lenders to provide loans of up to $350,000 with terms from 10 to 25 years. The SBA has recently placed a moratorium on new lenders in this program. 

Veterans Advantage

Veterans Advantage was a pilot program that reduced or waived fees for qualifying veteran-owned businesses (at least 51% ownership). While that program has ended, for all SBA Express loans made to eligible veteran-owned businesses, the upfront guaranty fee is $0. 

Additionally, the SBA guidelines state that “the SBA recognizes the importance of giving special consideration to veterans in its loan programs” and will prioritize processing of loans to veterans, and encourages lenders to do the same. 

These include veterans (other than those who received a dishonorable or bad conduct discharge), service-disabled veterans, active duty military in TAP, spouses of veterans or active duty service members, and widowed spouses of service members who died in service or of a service-connected disability.

SBA 7(a) loan requirements

To qualify for an SBA 7(a) loan, you need to meet both SBA eligibility requirements and your lender's credit standards.

Core SBA 7(a) loan eligibility requirements

Every business applying for an SBA 7(a) loan must meet these three fundamental requirements. 

1. You must operate as a for-profit business located in the United States, its territories, or possessions.

2. Your business must qualify as "small" based on SBA size standards for your industry, and not in a restricted industry. 

3. You must demonstrate the ability to repay the loan from cash flow or projected cash flow. 

The cash flow requirement is critical.  If your lender's financial analysis shows you lack reasonable assurance of repayment from business cash flow, your application must be declined — regardless of available collateral or outside sources of repayment.

New businesses should demonstrate the ability to project positive cash flow within two years.

Additional eligibility criteria

• Ownership requirements: Generally, the business must be 100% owned by U.S. citizens, lawful permanent residents (LPRs), or U.S. nationals who have their Principal Residence (as defined by IRS Publication 523) in the U.S., its territories, or possessions.
  
  However, as of Jan. 1, 2026, the SBA clarified that it allows up to 5% aggregate ownership by individuals who do not meet the full residency or citizenship criteria. (More details are available in this SBA notice.)

• Credit elsewhere: Your lender must also document your inability to qualify for similar credit elsewhere under what's known as the "credit elsewhere" test.
• Character requirements: All owners with 20% or greater ownership must meet character standards, including restrictions for certain criminal histories. Lenders must check the Credit Alert Verification Reporting System (CAIVRS) to verify no prior losses to the government or delinquent federal debt as required by the May 2025 SBA Information Notice.
• Franchises: Franchise businesses must be listed in the SBA Franchise Directory. 

Common disqualifiers

Credit score requirements for SBA 7(a) loans

The SBA requires applicants to be “creditworthy” but for the most part it does set minimum credit score requirements. Traditional lenders such as the banks who make SBA loans, often require personal and business credit checks. (Some SBA loans require the lender to discuss business and/or personal credit reports in the application.) 

Typical lender requirements

Traditional lenders such as the banks who make SBA loans, often require personal and business credit checks. SBA lenders typically look for personal FICO® scores of 670 to 720 or higher, business credit scores indicating low to moderate risk, and clean credit history without recent bankruptcies or major delinquencies. Owners with 20% or greater ownership should expect a credit check as part of the application.

FICO SBSS score minimum

The FICO® SBSS℠ score is a FICO score designed to help lenders make credit decisions for small business applications. It ranges from 0 to 300, with a score of 300 the “best” score in that it indicates the lowest level of risk. It can evaluate personal and business credit data, as well as application and financial data.

The SBA has required lenders to prescreen SBA 7(a) Small Loans using a FICO SBSS score, and most recently a minimum score of 165 was required to pass the prescreen. 

As of March 1, 2026, the SBA will sunset this requirement, but many lenders are expected to continue using it as they have in the past. 

Minimum personal credit score requirements often range from 680 to 720+ though lenders may set their own minimum scores. The SBA does not set minimum personal credit score requirements; these are typical lender standards.

*Note there are a few personal FICO score models with different score ranges.

Improving your credit before applying

If your credit scores are not strong, you may want to work on strengthening your business and/or personal credit profiles. If credit utilization is bringing down your scores, for example, you may want to pay down your balances. Dispute any errors on your credit reports, avoid applying for new credit before your SBA loan application, and build business credit through vendor accounts that report to business credit bureaus.

Find out how to build credit for your business with Nav’s free guide, Smart Credit Strategies for Small Business Owners.

SBA 7(a) loan fees

The SBA charges a guarantee fee based on the loan amount and term. Your lender might also charge packaging or other fees.

SBA guarantee fee (upfront fee)

When loans of 12 months or less are extended to longer maturities, loans are increased, or the borrower gets multiple 7(a) loans within 90 days, additional fees will apply.

The lender may pass the cost of the upfront fee on to the borrower, and the borrower may pay it out of the proceeds of the loan. 

Veteran fee waivers

For all SBA Express loans made to businesses owned and controlled by a veteran or spouse of a veteran, the Upfront Fee will be $0.

Lender fees

Lenders pay an annual service fee that can’t be passed on to borrowers. For 7(a) loans, that fee is currently 0.55% of the outstanding balance on the guaranteed portion.

Lenders can also charge borrowers reasonable packaging fees for services such as preparing a business plan, cash flow projections, or other documents related to the application, broker fees, and consulting on the loan. 

They can charge a flat fee of $2,500 for these services, and if they charge more than that they must itemize charges in SBA Form 159. There are limits to make sure the fees are reasonable and necessary. They can also pass on actual expenses for credit reports, appraisals, surveys, and attorneys fees to the borrower.

Lenders aren’t typically allowed to charge borrowers servicing fees (these are fees for servicing the loan once it’s made), though there are exceptions. Larger “extraordinary servicing fees” may be charged in specific circumstances, and those are limited as well. 

Maximum loan amounts by program

Repayment terms by use

Working capital: Loans for short-term operational expenses, inventory purchases, and accounts receivable financing receive terms up to ten years.

Equipment: Loans for machinery and equipment purchases, vehicles and rolling stock, or computer systems and software receive terms up to ten years or the useful life of the equipment, whichever is shorter. Terms may be extended to 15 years if the useful life of the equipment supports it. 

Real estate: Loans for purchase of commercial property, construction of facilities, or major renovations receive terms up to 25 years.

Approved uses of funds

You can use SBA 7(a) loan proceeds for purchasing land and buildings, construction or renovation, equipment and machinery, furniture and fixtures, working capital, refinancing certain existing business debt, seasonal lines of credit, inventory purchases, and business acquisition (with restrictions). 

Real estate occupancy requirements

When using 7(a) funds for existing real estate, your business must occupy at least 51% of the rentable space. For new construction, you must occupy at least 60% immediately, but you must plan to occupy 80% within 10 years. The remaining space can be leased to other tenants, providing potential rental income to help service the debt.

Collateral and personal guarantee requirements

The SBA requires available collateral but takes a practical approach when it's insufficient. The SBA requires collateral for loans over $50,000 when available, but generally won't decline your loan application solely because you lack sufficient collateral to fully secure it.

SBA 7(a) loans of $50,000 or less don't require collateral.

When collateral is required

For loans over $50,000, the SBA requires you to pledge all available collateral to fully secure the loan. This typically includes business assets (equipment, inventory, accounts receivable), business real estate, and even personal real estate owned by owners with at least 20% ownership.

Collateral shortfalls

When you don't have enough collateral to fully secure the loan, lenders must take available equity in personal real estate owned by co-borrowers, direct and indirect owners of 20% or more, and guarantors (except Supplemental Guarantors).

There is an exception for personal home equity if you have less than 25% equity in the property. For example, if your home is worth $200,000 but you have a mortgage balance of $175,000 you have less than 25% equity and you would not have to pledge that as collateral.

Vehicle collateral threshold

As of June 1, 2025, lenders don't need to place liens on vehicles valued at $20,000 or less (increased from $5,000). Lenders also don't need to lien vehicles that already have existing liens from other creditors.

Personal guarantee requirements

Most SBA loans require a personal guarantee. That means that if your business doesn’t pay back the loan, you are still responsible for any balances. 

• 20% or greater owners: Anyone owning 20% or more of the business must provide an unlimited personal guarantee for the full loan amount. In the case of default, you’re responsible for the entire balance and any fees. 
• Spouse signatures: Spouses must sign guarantees when the combined interest of both spouses and minor children totals 20% or more, or when jointly held collateral (like a home) is pledged.

Partial ownership changes

For loans financing partial business purchases, new rules set in 2025 require all new owners acquiring any direct or indirect ownership interest — regardless of percentage — to be co-borrowers on the loan.

Selling owners who retain less than 20% must provide a two-year guarantee or until the loan has been current for 12 consecutive months, whichever is later.

How to apply for an SBA 7(a) loan

The SBA loan application process follows a structured path from lender selection through funding.

Find an SBA-approved lender (Week 1)

Start by identifying lenders experienced with SBA loans. Look for a lender with SBA Preferred Lender status (PLP). This can provide a borrower with a faster and more streamlined approval process. Ask about typical approval rates, processing times, and experience with businesses like yours.

Gather required documents (Weeks 1-2)

Your lender will help you understand the documents you need to apply. Typically these will include three years of business tax returns (if available), three years of personal tax returns for all 20%+ owners, business financial statements (profit/loss, balance sheet), personal financial statements (SBA Form 413 or lender equivalent), business plan or use of proceeds statement, business licenses and registrations, lease agreements or real estate information, and resumes for all principal owners.

Your lender will request IRS tax transcripts directly from the IRS to verify your tax returns.

Complete the loan application (Week 2-3)

Your lender will provide application forms including SBA Form 1919 (Borrower Information) and SBA Form 413 (Personal Financial Statement) for all 20%+ owners and guarantors.

Prepare to explain how you'll use the loan proceeds, how your business will repay the loan, and why you can't get similar financing elsewhere.

Wait for underwriting and approval (Weeks 3-10)

Your timeline will vary depending on the type of loan and the lender’s experience. SBA Express loans can receive SBA approval decisions  very quickly while other loans may take much longer. Missing documents or delayed responses are the most common causes of approval delays.

Close and receive funds (Week 10-12)

If approved, your loan moves to closing. You'll review and sign loan documents, execute security agreements and collateral documents, and provide any required proof of insurance.

After closing, the lender disburses funds according to your approved use of proceeds. Most disbursements happen within a few days of closing, though construction loans release funds in draws as work progresses.

The two most important things you can do to speed up the process are to have your documents organized with your bookkeeping up to date, and to respond to lender questions. 

2025 and 2026 changes to SBA 7(a) loans

Several significant changes took effect June 1, 2025 and since then, the SBA has released additional guidance. 

Ownership and residency requirements

What changed: Under current guidance, businesses must now be 100% owned by U.S. citizens, lawful permanent residents, naturalized citizens, or U.S. nationals. All direct and indirect owners and guarantors must maintain primary residence in the U.S., its territories, or possessions. However, as of January 1, 2026, the SBA announced a 5% ownership exception for certain foreign nationals and overseas residents.

Who's affected: Businesses with any foreign ownership, are generally ineligible. This includes most businesses with foreign investors, companies with non-resident alien owners, and entities with offshore parent companies.

Co-borrower requirements for ownership changes

What changed: Any new owner acquiring any direct or indirect ownership stake — regardless of percentage — must be a co-borrower on loans financing the purchase.

Who's affected: Partial business acquisitions where buyers previously acquiring less than 20% might have avoided co-borrower status.

Vehicle collateral threshold increase

What changed: Lenders no longer need to lien vehicles valued at $20,000 or less (up from $5,000). Vehicles with existing liens also don't require new SBA liens.

Who's affected: Small businesses with modest vehicle fleets may see reduced closing costs.

Startup equity requirements

What changed: Businesses in operation for one year or less must contribute at least 10% of total project costs.

Who's affected: New business owners who previously might have qualified for 100% financing.

Enhanced verification requirements

What changed: Lenders must check CAIVRS (Credit Alert Verification Reporting System) for all applicants and maintain documentation of these checks in loan files.

Who's affected: All applicants, though this shouldn't impact qualified borrowers.

Refinancing requirements

What changed: Borrowers may not use SBA loans to refinance merchant cash advances. When refinancing, lenders must maintain the same lien position. 

Who's affected: Some borrowers may find it harder to refinance certain debts. In particular, business owners with often high-cost MCA funding cannot use an SBA to pay it off. 

Alternatives to SBA 7(a) loans

If you don't qualify for an SBA 7(a) loan or need faster funding, consider these options:

Conventional bank loans

Best for established businesses with strong credit, collateral and good financials. These loans offer potentially faster approval, more flexible uses, and larger loan amounts.

Business lines of credit

Best for ongoing working capital needs, lines of credit let you draw funds as needed, pay interest only on amounts used,  and borrow again once the funds have been repaid. They are available from both traditional and online lenders. 

Equipment financing

Best for specific equipment purchases. With equipment financing, the equipment serves as collateral, terms match equipment life, approval is often easier than general business loans, and you may get tax benefits for certain types of leases. 

Invoice financing

Best for B2B businesses with outstanding invoices. Invoice financing provides quick access to cash based on invoice quality (not just credit), helps manage cash flow gaps, though costs can be higher than traditional loans.

Other SBA loan programs

While 7(a) loans are the main types of SBA loans, there are several other programs that The SBA offers additional loan programs designed for specific purposes:

SBA 504 loans

SBA 504 loans finance major fixed assets like real estate and equipment through a unique three-party structure. A Certified Development Company (CDC) provides up to 40% of the project, a third-party lender covers up to 50%, and you contribute at least 10%.

SBA Microloans

SBA Microloans provide up to $50,000 through nonprofit intermediary lenders. The average loan amount is about $14,000, and they come with business training and technical assistance.

SBA Disaster loans

SBA Disaster Loans help businesses recover from declared disasters. These are the only loans that the SBA makes directly to borrowers. They feature low interest rates, no payments for the first year, and loans for both physical and economic disaster.

Frequently asked questions