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 interest rates and terms are attractive for those who qualify. Some program requirements have changed as of June 1, 2025. Find out whether an SBA 7(a) loan can help your business.
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Loan Amounts
Up to $5 Million
Interest rates
10.5% to 15.5%
repayment terms
Up to 25 years
turnaround time
30 – 90+ days
The SBA 7(a) loan program is the U.S. Small Business Administration’s most popular lending program. It includes several types of loans and is designed to help small businesses that qualify for financing, but are having trouble getting a similar loan elsewhere.
The SBA doesn’t make these small business loans; instead it guarantees a percentage of the loan for the financial institutions who make the loans, making them somewhat less risky and more appealing to lenders.
The maximum loan amount is $350,000—$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 competitive and repayment periods can be as long as 10— 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.
The main difference between an SBA loan and a traditional bank loan is that the SBA has specific requirements each lender must follow. If a borrower doesn’t repay the loan, and the financial institution has followed those SBA guidelines, it can collect on the guaranty from the SBA. (The borrower isn’t off the hook, though. The government may still take collateral and try to collect the balance due.)
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There are several types of SBA 7(a) loans:
Loan program: | Maximum loan amount: | Terms up to: | Worth noting: |
Standard 7(a) Loans | $5 million | 10-25 years | Great for working capital, real estate, refinance debt |
7(a) Small Loans | $350,000 | 7-25 years | Abbreviated credit underwriting with acceptable FICO SBSS Score |
SBA Express Loans | $500,000 | up to 10 years | Faster decision from SBA |
Export Express Loans | $500,000 | 7-25 years | Reduced documentation requirements |
Export Working Capital Loans | $5 million | 1, 2 or 3 years | Short-term working capital line of credit for exporters |
International Trade Loans | $5 million | 10-25 years | Helpful for businesses engaged in international trade |
CAPLines | $5 million | 10 years | Offers 4 short-term lines of credit for working capital needs |
Community Advantage | $350,000 | 10-25 years | Focus has been on financing for disadvantaged borrowers |
7(a) Working Capital Program | $5 million | 6 years | Supports both transaction and asset-based funding |
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.
Veterans Advantage is a program that reduces or waives fees for business at least 51% by veterans, active duty members eligible for TAP, members of the National Guard (including reservists) and spouses of those listed.
As of June 1, 2025, several key changes have been made to the guidelines for the 7(a) loan program. We will discuss several in this article, including:
This guide is designed for educational purposes only. Business owners should get advice from an SBA lender or a qualified financial advisor for circumstances unique to their specific business. SBA loan regulations involve nuances that may apply differently to individual situations.
When it comes to qualifying for an SBA loan, the SBA has specific eligibility requirements businesses must meet. These are extensive, but three core requirements are that applicants must:
Cash flow is a key requirement. In its guidelines, the SBA states:
“If the Lender’s financial analysis demonstrates that the Applicant lacks reasonable assurance of repayment in a timely manner from the cash flow of the business, the loan request must be declined, regardless of the collateral available or outside sources of repayment.” (Italics added)
New businesses should be able to demonstrate the ability to project positive cash flow within two years.
Other requirements include that:
Summary of Key Disqualifiers for SBA Loans
Business Type/Condition | Key Reason for Ineligibility |
Non-profit businesses | Generally ineligible; for-profit subsidiaries have strict conditions |
Businesses Engaged in Lending | Primarily engaged in lending/investment (banks, finance co's, etc.); exceptions based on <50% revenue from financing or specific models like certain pawn shops/mortgage servicers |
Passive Businesses | Don't actively use/occupy assets (e.g., developers/landlords not occupying); primarily own/lease real estate; specific rules for shopping centers/office suites (rent vs. membership); management agreements ceding sole discretion without owner oversight |
Life insurance carriers | Ineligible |
Foreign businesses | Located in a foreign country |
Pyramid/multilevel sales | Ineligible |
Gambling businesses | >1/3 annual gross revenue from legal gambling; or if primary purpose is gambling (e.g., casino). Exceptions for lottery commissions/state-licensed activities if within 1/3 revenue limit |
Illegal Businesses (Marijuana, Hemp, CBD) | Any activity illegal under federal, state, or local law. Marijuana: any revenue is disqualifying. Hemp: only if meets strict federal/state definitions. CBD: complex, depends on source, product type, claims, full legal compliance |
Discriminatory Businesses | Restrict patronage (other than capacity) or discriminatory hiring |
Government-Owned Entities | Ineligible, except certain Native American tribe-owned businesses with conditions |
Certain Loan Packagers | >1/3 gross annual revenue from packaging SBA loans |
Associates with Certain Criminal Records | Associate currently incarcerated, serving sentence, under indictment for felony/financial crime/false statement. Parole/probation may be eligible with risk mitigation plan |
SBA Lender Equity Interest | Lender or associate owns equity in applicant (exception: SBIC) |
Prurient Sexual Nature | Live prurient performances or >5% gross revenue from prurient products/services |
Prior Loss to Government | Applicant or associate's business caused prior loss on federal loan/financing (unpaid deficiency, compromise, bankruptcy discharge without full payment). CAIVRS check. Eligible if loss fully satisfied |
Delinquent Federal Debt | Applicant/guarantor owes delinquent non-tax federal debt (>90 days past due). CAIVRS check. Exceptions for resolved/in-appeal debt. Eligible if debt fully satisfied |
Political/Lobbying Businesses | >50% gross annual revenue from these activities |
Speculative Businesses | Holding items for price increase; risky ventures (oil wildcatting, stock dealing, R&D, spec homes (except Builders CAPLines)) |
Non-current Existing SBA Loans | Applicant has existing 7(a)/504 loan not current (>29 days unpaid) |
There are nuances to many of these restrictions. For example, a for-profit subsidiary of a non-profit organization may be eligible. And if you are on a payment plan to repay delinquent federal tax debt, you may be eligible.
If you’re not sure whether you qualify, you can review the restrictions starting on page 13 of the Standard Operating Procedures or, better yet, talk with an SBA lender who can guide you.
SBA requires acceptable credit. There is no specific minimum personal credit score; however, all 7(a) Small Loan applications (loans of $350,000 or less) will begin with a screening for a FICO® Small Business Scoring ServiceSM Score (SBSS Score).
The FICO SBSS is a business credit score that can analyze the personal credit data of up to five owners (those with 20% or greater ownership), the business credit of the business and even financial data. If the FICO SBSS score is below 165 (out of a score range of 0-300), it doesn’t necessarily mean you’re out of luck. In that case, the application must go through additional screening.
It is not unusual for banks and other SBA lenders to have their own minimum personal credit score requirements. Minimum personal credit score requirements typically range from 670—700+.
Type of Scores | Range* | Minimum scores |
FICO personal credit scores | 300-850 | Often 680-700+ (varies by lender) |
FICO SBSS Score | 0-300 | 165 (Community Advantage) |
*Note there are a few personal FICO score models with different ranges, and the newest version of the FICO SBSS score has a score range of 300-850
Bad credit is generally a hurdle to qualifying for these loans. 7(a) loan programs aren’t considered bad-credit business loans. Remember, the SBA requires a credit check for all owners with at least 20% ownership. Not only should you check your own personal and business credit before you apply, if you own a business with someone else, be sure to discuss credit together before applying.
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Interest rates on 7(a) loans are considered competitive and are often lower than borrowers can get elsewhere. Loans may carry a fixed or variable interest rate. Variable rate loans will be tied to the prime rate, the SBA Optional Peg rate or one-monthly LIBOR (though LIBOR is being phased out.)
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.
You can find current SBA loan rates here.
The SBA requirements on loan fees help protect small business borrowers against excessive fees. A few are allowed, while others are prohibited. Generally, though, small business owners will find the fees on these loans are less than loan fees and closing costs on other commercial loans.
Type of Fee | Fee Amount or Range | Who Pays |
SBA Guaranty Fee (Upfront Fee) | - $150,000 or less: 2% of guaranteed portion (lender may keep up to 0.5%) - $150,001–$700,000: 3% - $700,001–$5 million: 3.5% on first $1M + 3.75% on amount above $1M | Borrower |
Short-Term SBA Loan (12 months or less) | 0.25% of guaranteed portion | Borrower |
Export Working Capital Program (EWCP) Fee | - 12 months or less: 0.25% - 13–24 months: 0.525% - 25–36 months: 0.80% | Borrower |
7(a) Working Capital Pilot (WCP) Loan Fee | - 12 months or less: 0.25% - 13–24 months: 0.525% - 25–36 months: 0.80% - 37–48 months: 1.075% - 49–60 months: 1.35% | Borrower |
Veteran-Owned SBA Express Loan Fee | $0 – Fee is waived | SBA (Lender cannot charge borrower) |
Fee for Extending a Short-Term Loan | Based on new maturity using WCP/EWCP schedule | Borrower (after lender pays SBA) |
Fee for Increasing Loan Amount | Based on increased amount using original approval fee schedule | Borrower |
Lender’s Annual Service Fee | 0.55% of the guaranteed portion of the loan’s outstanding balance | Lender (cannot pass to borrower) |
All fees are based on the guaranteed portion of the loan unless otherwise noted and lenders are prohibited from splitting loans to reduce fees.
Fees for multiple loans made within 90 days are combined for guaranty fee calculation.
SBA lenders may require borrowers to pay out of pocket expenses such as: UCC filings or recording fees, photocopying, delivery charges, collateral appraisals and environmental investigation reports. Legal fees may also be charged to the borrower, within certain limits.
Late fees of up to 5% may be charged if a borrower is more than 10 days delinquent on a payment.
Be sure to ask your lender to break down all applicable SBA fees for your specific loan and factor in these fees when calculating your total borrowing costs. If you’re a veteran-owned business, ask about the SBA Express fee waiver.
Most SBA 7(a) loans have a limit of $5 million, except for 7(a) Small Loans and Community Advantage loans which go up to $350,000; SBA Express and Export Express Loans of up to $500,000.
The length of the loan will depend on how the loan proceeds will be used. (The repayment period may also be called the “loan term” or “loan maturity.”) Generally the SBA requires the lender to make the loan for the shortest period of time based on how the loan proceeds will be used, the useful life of assets acquired, and the borrower’s ability to repay.
The SBA guidelines require the following loan repayment terms:
SBA 7(a) loans are often working capital loans and they may be used for working capital purposes that include:
They may also be used to:
An SBA loan may also be used for business acquisition or changes in ownership, as long as certain conditions are met.
Notably there are some important restrictions on the use of proceeds. They include:
If you are hoping to use a 7(a) loan to acquire real estate, the general rule of thumb is that your business must occupy at least 51% of the rentable space when acquiring an existing property. For new construction, your business must generally occupy at least 60% of the rental property with restrictions on how long you can lease out the remaining property over the next decade.
Getting an SBA loan will likely be harder than getting an online loan, but should be no harder than getting a typical bank loan. Be prepared for a fairly long turnaround time, though there are some lenders that can streamline the process to about a month or so. You should be prepared to provide financial statements, tax returns and other documentation. Your lender can guide you through the process.
Once you have determined an SBA loan is right for your business, the next steps are to:
Most lenders will ask for:
Organizing your documents ahead of time can save you time, and can be helpful regardless of what type of business financing you get.
Not all lenders can make SBA loans. You’ll need to find one that does. 7(a) loans are made by banks and other financial institutions approved by the SBA to participate in SBA lending.
You may see the term Preferred Lending Partner, or PLP. This means the lender has been given approval by the SBA to underwrite their SBA loans and make credit decisions without SBA approval (in most cases). A PLP may be able to process an SBA loan application more quickly.
Also keep in mind that each lender may have its own preferred target customer. As long as a lender meets the SBA requirements and doesn’t discriminate on a prohibited basis, it may impose additional requirements. If your application with one SBA lender doesn’t get approved, try to find out why and determine whether that’s due to SBA loan requirements or the lender’s internal standards.
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Your lender will guide you through the paperwork, which may include:
You can review these forms yourself to understand the types of questions you may be asked, but your lender will guide you through the application process.
Be prepared to explain how you’ll use the funds and how your business will repay the loan.
The lender will review your application, then submit it to the SBA for final approval. This stage can take:
Once approved, your loan will move to closing and disbursement. This typically involves signing legal documents and setting up your repayment schedule.
Not all businesses will have the time or patience to qualify for SBA loans. The loan application process can take weeks, and it can easily be 1-3 months before the loan funds. In addition, it can be challenging to get an SBA loan for a startup.
If you don’t qualify for an SBA loan, you may want to look for other types of small financing options. If your business has strong financials and strong credit, you may be eligible for conventional financing through a bank or credit union.
Other options may include:
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Some lenders do offer 7(a) loans to startups in business for a year or less. However, these owners are required to contribute at least 10 percent of the total project costs. While you may think of this as a down payment, it is officially called an “equity injection.”
Personal guarantees are generally required. An individual who owns 20% or more of the business must provide a full unlimited personal guarantee. (Sometimes referred to as “guaranty.”) And each loan must be guaranteed by at least one individual or entity.
Sometimes the SBA may require a personal guarantee from a key person in the business even if they don’t own 20% or more of the business. Spouses may be required to sign a personal guarantee when the combined interest of the two spouses and minor children totals 20% or more. In addition, non-owner spouses will be required to sign off if jointly held collateral (such as home equity) is pledged.
You don’t have to have collateral to get an SBA loan. However, the SBA will require the applicant to pledge collateral when it is available to fully secure the loan. If there is not sufficient collateral in the business, the SBA must take available equity in the personal real estate (residential and investment property) of any owners with 20% or more ownership. (An exception is made if there is less than 25% equity in personal real estate.)
SBA 7(a) Small Loans of $25,000 or less do not require collateral.
Personal guarantees are also generally required. An individual who owns 20% or more of the business must provide a full unlimited personal guarantee. (Sometimes referred to as “guaranty.”) And each loan must be guaranteed by at least one individual or entity. Sometimes the SBA may require a personal guarantee from a key person in the business even if they don’t own 20% or more of the business. Spouses may be required to sign a personal guarantee when the combined interest of the two spouses and minor children totals 20% or more. In addition, non-owner spouses will be required to sign off if jointly held collateral (such as home equity) is pledged.
Note that startup businesses (businesses in year for one year or less) require the small business owner to contribute at least 10 percent of the total project costs. While you may think of this as a down payment, it is officially called an “equity injection.”
Many small business loans require insurance to help protect the lender and SBA loans are no different. Hazard insurance is required on any assets the business pledges as collateral. Additional insurance may be required as appropriate, including:
Life insurance may be required on the owners or key employees of certain businesses where the loan is not fully secured by collateral.
Keep in mind that there are times other SBA financing programs may be a better fit for your business needs. Just a few examples:
Learn more about the various types of SBA loans here.
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