How to Get an SBA 7(a) Loan: Rates & Approval Tips
The U.S. Small Business Administration (SBA) offers financial assistance to small businesses through the SBA loan program. SBA loans are issued by individual banks, credit unions and online lenders, but the SBA guarantees a portion of each loan. Because the SBA assumes some of the risk, lenders can offer larger loans with lower rates to a wider range of business owners.
While there are multiple types of SBA loans, the 7(a) loan program is the SBA’s primary source of financing. If you’re interested in the lengthy terms and capped interest rates that come with this loan type, we’ll break down what you need to know to move forward.
What is an SBA 7(a) loan?
SBA 7(a) loans offer up to $5,000,000 that can be used to cover a wide range of business expenses, including purchasing furniture, fixtures and supplies; financing equipment; acquiring real estate and more. This loan type has fewer limitations than other SBA loan programs, making it a popular choice. In fiscal year 2025, the average loan size was $477,571.
7(a) loans have a few distinct pros and cons. Capped rates and long repayment terms may allow businesses to keep their monthly payments relatively affordable. However, these loans generally require a personal guarantee, which can put your personal assets on the line if you default on your loan. Also, SBA loans are slower to fund than other types of small business financing, so they may not be ideal if you need emergency financing.
Types of SBA 7(a) loans
There are several types of 7(a) loans. The right loan for you will depend on your business and your needs. For example, if you need fast funds, an SBA Express loan might be ideal. But if you need ongoing access to funds, you might want to opt for an SBA line of credit.
Here’s what you need to know about the different loan types within the 7(a) program:
- 7(a) small loans: Smaller loans with a maximum loan amount of $350,000
- Standard 7(a) loans: Larger loans with amounts from $350,001 to $5,000,000
- Express loans: Loan amounts up to $500,000 with a streamlined application process, providing faster funds than other types of SBA loans
- CAPLines: Revolving lines of credit up to $5,000,000 with credit lines designed for contractors, builders, seasonal businesses and more
- Export loans: Export Working Capital loans provide up to $5,000,000, while Export Express loans offer up to $500,000 with expedited processing
SBA loan terms
Repayment terms for SBA 7(a) loans vary based on the borrower and how they plan to use the loan funds. Generally speaking, the SBA guideline is to provide the shortest appropriate term based on the business owner’s ability to repay the loan. That said, SBA loans tend to offer longer terms than other types of small business loans.
Here’s what you can expect from 7(a) term loans based on the loan purpose:
- Working capital or inventory: Up to 10 years
- Purchasing or refinancing equipment: Typically up to 10 years, unless the equipment is supposed to last longer that timeframe, in which case terms can go up to 25 years
- Acquiring, improving or refinancing real estate: Up to 25 years including extensions
SBA loan rates
7(a) loans may have fixed or variable interest rates. In many cases, variable-rate loans have lower rates, but rates can change at any time. With fixed-rate loans, the interest rate might be slightly higher, but it will stay the same for the entire term.
While exact rates on 7(a) loans vary between lenders, the SBA sets maximum interest rates to keep costs from getting too high. These maximums are calculated using a base rate — usually the prime rate — plus an additional percentage that lenders are allowed to charge to minimize their lending risk.
Maximum interest rates for variable-rate loans
| Loan amount | Max. variable rate |
|---|---|
| $50,000 or less | 13.25% |
| $50,001 to $250,000 | 12.75% |
| $250,001 to $350,000 | 11.25% |
| More than $350,000 | 9.75% |
Maximum interest rates for fixed-rate loans
| Loan amount | Max. fixed rate |
|---|---|
| $25,000 or less | 14.75% |
| $25,001 to $50,000 | 13.75% |
| $50,001 to $250,000 | 12.75% |
| More than $250,000 | 11.75% |
SBA 7(a) loans also come with fees, which can increase the cost of borrowing. For example, lenders are responsible for paying an SBA guarantee fee, which is a percentage of the guaranteed portion of the loan. This fee is often passed along to borrowers and is charged as follows:
- Less than $150,000: 2.00% of the guaranteed portion
- $150,001 to $700,000: 3.00% of the guaranteed portion
- $700,001 to $5 million: 3.50% of the guaranteed portion up to $1 million, plus 3.75% of the guaranteed portion exceeding $1 million
- Loans with terms of 12 months or less: 0.25% of the guaranteed portion
In addition to the SBA guarantee fee, lenders can require you to pay certain upfront costs related to your loan closing. However, they can’t pass the SBA service fee onto you.
How to get an SBA 7(a) loan
1. Check eligibility
SBA 7(a) loans are available for a wide range of businesses, assuming they meet the SBA’s size standards, which set revenue or employee limits that vary by industry. In addition to size criteria, businesses must meet these additional SBA requirements:
- Must be a for-profit business
- Must do business and be physically located in the U.S. or its territories
- Must be creditworthy enough to be able to repay the loan
- Must have exhausted other financing options
SBA loans are only available to borrowers who cannot qualify for a loan with reasonable terms from another source. To determine whether you meet this criteria, SBA lenders will look at your business from the perspective of a conventional lender to see how your credit profile, business history and annual revenue align with lender requirements.
This means that you don’t need to have a loan rejection to get an SBA loan. If your lender agrees that you wouldn’t meet the minimum criteria to get a traditional loan with reasonable terms, you may be eligible for an SBA loan.
2. Find an SBA lender
To get a 7(a) loan, you’ll need to work with an SBA-approved lender. There are multiple ways to get started in your search. The SBA’s Lender Match tool is one option. With this, you can describe your needs and the SBA will prepare a list of lenders that might be a potential match. Some of these lenders may contact you, but you can also reach out to them to learn more about interest rates, minimum requirements and other factors.
If you want to compare a wider range of loan options, you could also work with a marketplace like LendingTree, which allows you to fill out one form and be matched with potential loan offers from a network of 30+ business lenders. This includes SBA and non-SBA lenders, so you could be matched with SBA loans, non-SBA loans or a mix of both, depending on your business.
3. Compare your options
Once you’ve identified a list of potential SBA lenders, take a moment to consider which might be best for your business. As you compare your options, pay attention to the following factors:
- Minimum requirements: Lenders set their own time in business, annual revenue and credit score requirements for SBA loans. The minimum criteria varies between lenders, but many require businesses to be in operation for at least two years with a personal FICO Score of 650 or higher to qualify.
- Down payment: While the SBA doesn’t always require a down payment on 7(a) loans, lenders are generally allowed to set down payment requirements that align with their requirements for similarly-sized, non-SBA loans. Down payment requirements typically range from 10% to 30% for 7(a) loans.
- Collateral: While all SBA loans require a personal guarantee, additional collateral may or may not be required. Collateral is not required on 7(a) loans below $50,000, but for higher loan amounts, lenders are allowed to use their existing collateral policies, meaning exact requirements may vary.
- Rates and terms: The SBA sets interest rate maximums for 7(a) loans, but the exact rates and terms offered to your business may vary between lenders. Use a business loan calculator to compare monthly payments and total costs with each potential lender.
- Preferred Lender status: Some lenders participate in the SBA’s Preferred Lender program, which gives them the authority to make final decisions on SBA-guaranteed loans without having to wait on the SBA for final approval. Working with a Preferred Lender may speed up the loan process, allowing you to receive your funds faster than you would with a non-preferred lender.
4. Gather documents and apply
Once you’re ready to apply with one or more lenders, you’ll need to compile several documents to complete your 7(a) loan application. Many of these documents can be pulled directly from your tax and accounting software.
While exact requirements vary between lenders, you can expect to provide:
- Personal financial statement
- Business debt schedule
- Current business income statement and balance sheet
- Personal and business tax returns for the past three years
- Cash flow projections for two years
- Real estate purchase agreements (when buying real estate with SBA loan proceeds)
- Documentation of any lawsuits, judgments or bankruptcies
- A copy of your business plan
As you look around for the documents you need, consider saving them in a secure folder so they’re readily accessible. Many SBA lenders allow you to apply online, though some may require a phone call or in-person visit.
For assistance with your SBA loan application, you can reach out to a Small Business Development Center (SBDC) in your area. SBDCs offer free business consulting in partnership with the SBA.
5. Wait for review and approval
After submitting your application, keep an eye on your phone and email, as your lender may follow up with questions or requests for additional information. If they decide to move forward based on the documents you’ve shared so far, you’ll receive a term sheet outlining the lender’s terms and any required fees.
Keep in mind that this term sheet is not a final approval. If you accept the terms as they’ve been presented to you, your lender will begin a more formal underwriting process, during which you might be asked to provide more detailed documents.
6. Sign your loan documents
If both your lender and the SBA approve your loan application, they’ll send you a commitment letter. This loan agreement covers all of the most important details of your loan, including rates, terms and requirements, and you’ll need to sign it to move forward with the closing process.
During this process, you’ll need to sign additional documents, including a promissory note, a personal guarantee and agreements for any pledged collateral. There may be additional paperwork, which your lender can explain. Once you sign these final documents, the loan is closed and your money will be dispersed.
Alternatives to SBA 7(a) loans
If you decide that an SBA 7(a) loan isn’t right for you, here are some alternative options:
- Microloans: If you only need a little funding, microloans offer smaller funding amounts, typically alongside more lenient eligibility requirements.
- Startup business loans: As the name suggests, startup business loans are meant to help fund newer businesses. They typically have more flexible eligibility criteria, but can come with lower borrowing limits than traditional small business loans.
- Small business grants: Small business grants offer access to funding that doesn’t need to be repaid. However, you’ll likely face stiff competition for these funds. Plus, you may have to complete a lengthy application process.