SBA Loans
Government-Backed Rates. One App.
Private lenders, government-backed — as little as 10% down on acquisitions, rates from ~6% APR, and terms up to 25 years.
Rates from 6%
Government-backed guarantee lets lenders offer rates typically reserved for the most creditworthy conventional borrowers.
10% Down Payment
vs. 20–30% for conventional commercial loans — preserving significantly more working capital at closing.
Terms up to 25 Years
Longer amortization periods mean lower monthly payments and better cash flow throughout the loan term.
Up to $5.5M
SBA 7(a) loans up to $5M, SBA 504 up to $5.5M. Finance expansion, real estate, equipment, and acquisitions.
How SBA Loans Work
SBA loans are provided by private lenders — banks, credit unions, CDFIs — but partially guaranteed by the federal government, which reduces lender risk and enables better terms for borrowers.
Prepare Application
Gather 3 years of financials, personal tax returns, business docs, and project-specific materials.
Lender Underwriting
An SBA-approved lender reviews your package and makes an initial credit decision.
SBA Review
For non-PLP lenders, the SBA reviews and issues the guarantee. PLP lenders skip this step.
Approval & Closing
You receive a commitment letter, satisfy conditions, sign closing docs, and pay SBA fees.
Funded
Proceeds are disbursed at closing or in draws (for construction). Lender services the loan.
SBA Loan Programs
Four programs, each purpose-built for different business needs and loan sizes.
SBA 7(a) Loan
The SBA's most common program. Up to $5M for working capital, equipment, business acquisition, real estate, and debt refinancing. Variable or fixed rates with partial SBA guarantee reducing lender risk.
Best for: Established businesses needing flexible financing for a variety of purposes — especially those that might not qualify for conventional financing at competitive rates.
SBA 504 Loan
Designed for major fixed asset purchases. A bank covers 50%, a Certified Development Company (CDC) covers 40% at a fixed below-market rate, and you put 10% down. Up to $5.5M on the SBA portion.
Best for: Businesses purchasing, renovating, or constructing owner-occupied commercial real estate or acquiring long-lived heavy equipment.
SBA Express
Streamlined 7(a) with a 36-hour SBA response time for loans up to $500K. Faster processing but a lower SBA guarantee (50% vs 85%) and typically higher rates than standard 7(a).
Best for: Businesses needing faster decisions and willing to accept potentially higher rates in exchange for reduced paperwork and expedited approval.
SBA Microloan
Up to $50K (average $13K) through nonprofit intermediary lenders for working capital, supplies, equipment, or fixtures. Terms up to 7 years at 8–13% APR.
Best for: Startups, very small businesses, and businesses with minimal operating history that need smaller capital amounts and may not qualify for traditional programs.
How SBA Loans Compare
SBA loans carry the lowest rates and longest terms in small business financing — the tradeoff is a 60–90 day process and stricter documentation requirements.
Benefits & Considerations
For businesses that qualify and can wait 60–90 days, SBA loans are the most cost-effective financing available to small businesses.
Benefits
- Rates from ~6% APR (504 CDC portion) — government guarantee enables pricing below conventional lenders
- Lower down payment (10–15%) vs. 20–30% for conventional commercial loans
- Longest terms available — up to 25 years for real estate
- Finances intangible assets (goodwill, customer lists) conventional lenders refuse
- Fixed-rate options on SBA 504 protect against rate increases
- Free advisory support available through SCORE and SBDCs — SBA-affiliated mentoring and consulting networks
Considerations
- 60–90 day process — not suitable for urgent capital needs
- Extensive documentation requirements across business and personal finances
- Personal guarantee required from all owners with 20%+ ownership
- SBA guarantee fees (0–3.75% of guaranteed portion) add to closing costs
- Restrictions on use of funds for certain business types and purposes
- Collateral required if business assets are available
Industry Applications
How businesses across industries use SBA financing to grow without over-leveraging.
Manufacturing
SBA 504 loans let manufacturers purchase specialized equipment and production facilities with only 10% down, preserving working capital for inventory and materials.
Medical Practices
Healthcare providers leverage SBA 7(a) loans for practice acquisitions and clinic expansions, benefiting from lower equity requirements and longer amortization periods than conventional medical financing.
Retail & Restaurants
Retail and restaurant owners use SBA financing to acquire their locations rather than leasing, building equity while often reducing monthly occupancy costs compared to commercial leases.
Business Acquisitions
SBA 7(a) is the most common structure for buying an existing business — it finances goodwill and intangibles that conventional lenders won't touch, with as little as 10% down.
Real-World Example
$1,000,000 manufacturing facility — SBA 504 vs. conventional commercial real estate loan
Conventional Loan
SBA 504 Loan
Financial impact of choosing SBA 504
The SBA 504 monthly payment is slightly higher ($94/mo), but the manufacturer puts $150,000 less down — capital that can be deployed into inventory, equipment, or hiring immediately. The 40% CDC portion at a fixed 5.5% provides permanent protection against rate increases on that tranche. For a growing business, the $150,000 in preserved working capital nearly always generates more value than the $94/month saved on a conventional loan.
Frequently Asked Questions
Free Tools to Help You Prepare
Run the numbers before you apply.
Business Plan Template
Build a lender-ready business plan with 8 guided sections, DSCR guidance, and underwriter tips.
Business Loan Calculator
Model your monthly payment across different loan amounts, rates, and terms before applying.
Financial Ratios Calculator
Calculate your DSCR, current ratio, and debt-to-equity — the exact metrics SBA lenders evaluate.
Financial Health Checklist
A 24-point self-assessment to see how lender-ready your business is before you submit.
See Which SBA Program Fits Your Business
Find out which SBA program you qualify for and what your payments would look like.