How to Apply for an SBA Loan in 5 Steps
If you need funding to take your business to the next level, it’s a good idea to consider SBA loans first. Individual lenders offer these small-business-friendly loans in partnership with the U.S. Small Business Administration (SBA), which guarantees a portion of your loan so that your lender can offer you a lower rate.
Business owners often avoid SBA loans because they have a reputation as being difficult to get. But while it’s true that it may require a bit more work than other loans, the benefits almost always outweigh the costs. Planning ahead so you have everything you need for each of the five steps to apply can make the process simpler.
- The SBA application can be time consuming, and getting funding takes about one to three months.
- SBA loan application requirements vary depending on the lender and the loan program, but you can plan to provide detailed information on both your personal and business finances.
- Many lenders accept SBA loan applications online, though some traditional banks may require a phone call or an in-person appointment.
1. Check if you qualify
Applying for an SBA loan begins with understanding how to qualify for an SBA loan. SBA loan eligibility depends on several factors, with loan requirements varying between SBA lenders and loan programs.
However, some eligibility requirements are standard for all SBA loan applicants. Before you pursue an SBA loan, check if you meet the following requirements:
- You must be an officially registered for-profit business.
- Your business must be physically located and operating in the U.S. or its territories.
- The business must meet the SBA’s definition of small business.
- The business must not be able to obtain credit with reasonable terms through other sources.
Keep in mind that the SBA loan requirements are somewhat different for each SBA loan program. For example, while SBA 7(a) loans can be used for almost any business purpose, SBA 504 loans can’t be used for working capital, and microloans can’t be used for real estate purchases.
This means you’ll need to do some research to understand the different types of SBA loans and their individual requirements to choose the loan program that best matches your needs.
To qualify for an SBA loan, you’ll need to meet your lender’s minimum requirements in addition to the SBA’s. SBA-approved lenders are allowed to set similar criteria for SBA loans as they do for similarly sized, non-SBA loans.
This means that the minimum credit score, time in business and annual revenue needed to qualify for an SBA loan depends on the lender, and you may need to compare multiple lenders to find the right option for you.
2. Choose your loan type
When people say “SBA loan,” they’re typically referring to a 7(a) loan, which is the SBA’s primary loan program. They can be used for most business purposes, including working capital.
There are also 504 loans, which provide small businesses with long-term financing for acquiring fixed assets that are used for expansion or modernization. The loans are available through Certified Development Companies (CDCs), a specific type of nonprofit focused on economic development.
Additionally, the SBA offers microloans up to $50,000.00 for small businesses and nonprofit child care centers with smaller financial needs and Economic Injury Disaster Loans (EIDLs) for businesses in a government-declared disaster area.
Here is a breakdown of the most popular SBA loan types:
| Loan program | Uses | Loan amount | Terms | Best for… |
|---|---|---|---|---|
| 7(a) | Nearly any business purpose | Up to $5,000,000.00 | Up to 300 months for real estate and equipment; up to 120 months for other uses | General, long-term financing for businesses |
| CDC/504 loans | Acquiring a fixed asset, like commercial real estate or heavy equipment | Up to $5,500,000.00 | 120 months to 300 months | Small businesses that need help purchasing land, renovating buildings, buying machinery or other fixed assets |
| Microloans | Working capital or purchasing assets such as inventory, furniture or equipment | Up to $50,000.00 | Up to 300 months | New or early-stage businesses that need help covering smaller business costs |
| EIDLs | Working capital | Up to $2,000,000.00 | Up to 360 months; the first payment can be deferred for a year | Small businesses impacted by a declared disaster |
Many lenders offer both SBA loans and regular, non-SBA small business loans. In general, SBA loans tend to be more business friendly, offering cheaper rates and longer terms. However, they do take longer to get and have a higher denial rate than standard small business loans, which are often quicker to receive but more expensive overall.
3. Find a lender
Only lenders who partner with the SBA can offer SBA loans. The following types of lenders might offer SBA loans:
- Traditional lenders: Both traditional banks and credit unions provide SBA loans. Most of the top SBA lenders by approval count fall within this category, though it’s worth noting that traditional lenders may have stricter down payment and collateral criteria.
- Alternative lenders: Many online lenders also provide SBA loans, giving you a way to apply for government financing without ever stepping foot in a bank. Online lenders tend to charge more for financing, but rates are capped by the SBA to keep costs from getting too high.
- Microlenders: The SBA partners with specially designated intermediary lenders to provide microloans. These lenders are typically community-based nonprofit organizations with experience in lending and management. You can find a full list of microlenders on the SBA website.
- Certified Development Companies (CDCs): These nonprofits are also community-based, but with a focus on economic development. CDCs are certified and regulated by the SBA. They offer 504 loans, which can be used for financing fixed assets that create jobs.
If your business already has a trusted bank or credit union, check to see if they offer SBA loans. Keeping all your business loans and other accounts in one place can help you stay on top of your finances. Plus, some banks may be more willing to lend you money if you have a previously established banking relationship.
If your financial institution doesn’t offer SBA loans, or you want to compare their loan options against other lenders, you can use the SBA’s free online Lender Match tool, which can connect you with over 800 lenders. You can also contact your local SBA District Office and ask for referrals to local SBA lenders in your area.
What to look for in a lender
Here are a few things to consider when looking for an SBA-approved lender:
- What terms and loan amounts do they offer?
- What rates and fees do they charge?
- What types of collateral do they accept?
- What do recent customer reviews and ratings look like?
- Is it easy to manage your loan online or reach customer service?
- Are they an SBA Preferred Lender that can process your application faster than non-preferred lenders?
4. Gather your documents
The documents needed for an SBA loan depend on the lender and the loan type, but the list is often quite extensive, and the application can easily take a few weeks to complete.
Your lender will let you know more specifically what’s needed from you, but the following documents are usually required:
- Your SBA loan application form (Form 1919)
- A copy of your business license, articles of incorporation and other operating agreements
- A copy of your business plan
- A list of any other businesses you own or are affiliated with
- Personal and business tax returns for the past three years
- Business financial statements, such as current profit and loss statements and balance sheets
- A personal financial statement and resume for each principal owner of the business
- A record of your loan application history
- A schedule of your business debt payments
- Real estate purchase agreements (if the loan is being used to buy commercial property)
- Documentation of any lawsuits, judgments or bankruptcies
If you’re not sure what’s needed or you’re having trouble putting together your application, you can ask your SBA loan officer for help.
5. Apply for your loan
Once you have everything ready, you’ll submit your application to the lender. In many cases, you can submit your SBA loan application online, though some traditional lenders might require an in-person appointment or a phone call with a loan specialist. The lender may follow up with questions or requests for additional documents as they process your application.
If they decide to move forward, you will receive a document called a term sheet. This document outlines your loan request and the lender’s terms, plus information on any required fees or deposits.
If you accept the loan terms, the lender will begin a more formal underwriting process. You may be asked for more documents during this time — your lender will guide you through the process and explain any documents they need.
If the SBA and lender approve your application, they’ll notify you and send a “commitment letter.” You must accept it if you want to proceed. You’ll then receive closing documents, and your lender will guide you through the closing process. As part of closing, you’ll need to sign a promissory note, personal guarantee and agreements for any collateral. There may be additional paperwork, which your lender can explain.
Once you sign these final loan documents, the loan is closed and the money is disbursed.
How long does it take to get an SBA loan?
All in all, the SBA loan process takes roughly one to three months from beginning to end, though the timeline can vary depending on how organized your application is, who you’re applying with and what type of loan it is.
When you apply for an SBA Express loan, it will usually be on the shorter end of that spectrum. The SBA makes decisions on Express loan applications within 36 hours, but the lender may still take 25 to 60 days to deposit funds into your bank account.
SBA turnaround time is also faster if you apply with Preferred Lenders. For example, Citizens Bank is an SBA Preferred Lender that claims it can close SBA loans within 30 to 45 days.
How to improve your chances of approval
There are several things you can do to improve your odds of getting an SBA loan.
If you have time to focus on long-term strategies before you apply for an SBA loan, these steps could increase your approval odds for the future:
- Save up to lower your borrowing needs and increase the size of your down payment.
- Work on improving your personal and business credit by paying down debt and making on-time payments.
- Wait until your business has been open for at least two years before you apply, as startups are less likely to qualify for SBA loans.
If you can’t afford to wait for financing, here are some steps you could take right away:
- See if you can provide additional collateral, which can lower the risk for the lender.
- Consider scaling down your funding request, as it might be easier to qualify for a smaller loan amount.
- Create a thorough, professionally presented business plan with financial details and projections to boost your lender’s confidence.
What to do if your application is denied
According to a LendingTree study, nearly half of all SBA loan and line of credit applications were denied in 2024. This is a significantly higher denial rate than any other business loan type. So, it’s not uncommon to have your application denied, and it’s a good idea to know your options if you fall into this camp.
If your application for an SBA loan is denied, your lender will be your first point of contact. They’ll provide you with a letter explaining why your application was rejected and can provide information about your options from here. For example, you may be able to appeal the decision or you may have to wait a year before applying again.
Alternatives to SBA loans
If you’re not able to find a workaround for an SBA loan, here are a few other types of business financing you could consider:
- Equipment financing: Equipment loans provide funds for essential business equipment, such as factory machinery or farm tractors. Because the equipment acts as collateral, some lenders are willing to work with startups and bad credit borrowers.
- Term business loans: Standard, non-SBA business loans are offered by traditional and online lenders, though the latter typically has more lenient eligibility requirements. Keep in mind that loans from alternative lenders often have higher interest rates and shorter repayment terms.
- Revolving lines of credit: Business lines of credit give you access to funds that you can borrow from at any time, up to a certain limit. However, lines of credit aren’t ideal for large purchases, and they may come with additional maintenance fees.
- Merchant cash advances: With an MCA, your business receives a lump sum of funds that is repaid through a portion of your future debit and credit card sales. Because eligibility is based on cash flow, MCA lenders usually don’t require good credit to qualify. However, this can be an expensive form of financing, so it’s important to be aware of all rates and fees before you sign an agreement.
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