Is an SBA Loan Right for Your Business?
SBA loans are small business loans offered by private lenders but partially backed by the U.S. Small Business Administration. Because they’re partially guaranteed by the federal government, they often come with long terms and capped interest rates.
SBA loans can be used for a variety of business expenses, making them a flexible, low-cost option for established businesses.
Is an SBA loan right for you?
SBA loans are available for small, established for-profit businesses located and operated in the U.S. (To determine if your business is “small,” you can use the SBA’s Size Standards Tool.)
An SBA is a good fit if:
- Your business has a strong credit history.
- You can demonstrate your ability to repay the loan.
- You don’t need funding fast (the process can take between 60 and 90 days).
- The loan will be used to further your business venture and make it more profitable.
- You aren’t able to obtain the necessary funding from certain personal resources or another creditor
Real business example: a local trucking company with steady sales looking to add vehicles to its fleet.
It’s not the best option if:
- You need funding immediately.
- Funding will be used for acute needs rather than business investment.
- You can source funding from personal resources or another creditor.
Real business example: a retail shop looking to cover an inventory lull during the busy season.
It depends — established businesses with strong credit profiles may be able to successfully qualify for (and get lower interest rates with) traditional business loans. The average interest rate for a business term loan in Q3 2025 was around 7.2%, which is lower than the cap for even the smallest SBA loans. Small businesses with challenged credit, as well as those who may qualify for credit elsewhere (or whose owners have personal resources that could be used to fund business projects) may have a hard time qualifying for an SBA loan.
However, for those who do qualify, SBA loans can provide longer repayment times, which can mean more affordable monthly payments, along with other benefits.
Use LendingTree’s SBA loan payment calculator to estimate your monthly loan payments
Qualifying for an SBA loan
To qualify for an SBA loan, your business will need to meet the following criteria:
- Be a registered, legal, for-profit enterprise
- Be physically located and operating in the U.S. or its territories
- Meet SBA small business size standards
- Be creditworthy and demonstrate an ability to repay the loan
- Be unable to qualify for the amount you need using traditional financing with reasonable terms
According to the Federal Reserve’s Small Business Credit Survey, almost two-thirds of SBA loan or line of credit applicants — 61% — were either fully or partially approved for their funding in 2025.
Why SBA loans get denied
While the majority of SBA loans do get at least partially funded, about 40% are denied. Common reasons behind denied applications may include:
- Poor business creditworthiness (as determined by the partner lender)
- Insufficient business cash flow
- Insufficient business assets or collateral
- Too much existing debt
- Applicant’s ability to get funding elsewhere (including owner resources)
- Prior default on another type of government-backed loan (like federal student loans or an FHA mortgage)
It’s also true that certain types of businesses, including non-profits, financial businesses such as banks and lending institutions, and passive businesses (such as landlords attempting to use a business loan to buy a new home to rent out) are not eligible for SBA loans.
While the existence of an owner’s criminal record doesn’t automatically disqualify them for an SBA loan, some types of criminal history, including current charges or incarceration, federal crime convictions, or failure to disclose could cause an SBA loan application to be denied.
Note: While the SBA’s eligibility requirements will always be in effect, these loans are offered through private lenders that work in partnership with the SBA. These lenders will all also have their own individual eligibility requirements for these (and other) loans, potentially including minimum credit score requirements, debt-to-income ratios and more.
See how LendingTree breaks down the pros and cons of SBA loans
Types of SBA loans
There are three main types of SBA-guaranteed loan programs, each geared toward slightly different business goals.
SBA 7(a) loans
Best for: Businesses seeking working capital to cover a range of expenses
When you hear someone talking about SBA loans, they’re likely referring to SBA 7(a) loans — the SBA’s primary loan program for small businesses. These loans typically offer up to $5,000,000 in funding, though so far in fiscal year 2025, the average loan size was $477,571. Interest rates on SBA 7(a) loans max out at 14.75% for fixed rates or 13.25% for variable rates, with lower caps on larger loan sizes.
SBA 7(a) loan funds can be used for a variety of purposes, including buying equipment, improving real estate, purchasing an existing business and/or as general working capital to cover your business expenses.
There are multiple types of loans within the 7(a) loan program. Here are the basics:
- 7(a) Small: Loan amounts up to $350,000.
- Standard 7(a): Loan amounts from $350,001 to $5,000,000.
- SBA Express: Loan amounts up to $500,000 with an expedited turnaround time.
- CAPLines: Cyclical financing with line of credit amounts up to $5,000,000.
The 7(a) loan program also offers SBA loans designed for businesses that export goods and participate in international trades.
Note that collateral and down payment requirements for 7(a) loans vary based on the lender and the loan size.
SBA 504 loans
Best for: Businesses looking to finance fixed assets like real estate and equipment
With the 504 loan program, the SBA offers loans up to $5,500,000 with repayment terms lasting as long as 300 months. 504 loans can be used to finance a wide range of fixed assets, including buildings, facilities and long-term machinery or equipment. They can also be used to consolidate or pay off certain kinds of debt.
The only condition is that these funds must promote business growth and job creation. Generally, businesses must create or retain at least one job opportunity for every $65,000 they receive with an SBA 504 loan, though specific requirements vary by industry and location.
In fiscal year 2025, SBA 504 loans had an average loan size of $1,154,122 — higher than the average loan size for 7(a) loans. For this reason, 504 loans may be a better fit if you’re looking to finance expensive equipment or real estate. Just keep in mind that a minimum down payment of 10% to 20% is usually required.
SBA microloans
Best for: Businesses with lower-cost needs and/or those that cannot qualify for other types of SBA loans
As the name suggests, SBA microloans provide smaller loan amounts — up to $50,000 — with a maximum repayment term of seven years. The average SBA microloan is around $13,000. Microloans are offered by designated intermediary lenders, which are often nonprofit, community-based organizations.
As with other types of loans, exact requirements vary between lenders. But generally speaking, SBA microloans are easier to qualify for than other types of SBA loans, with some lenders offering microloans to startups, low-income borrowers and borrowers with limited credit.
How LendingTree works with SBA lenders
With LendingTree, you can fill out one simple form to be matched with potential loan offers from our network of 30+ business lenders. This network includes both SBA and non-SBA lenders, so you may be matched with SBA loans, non-SBA loans or a mix, depending on what you qualify for.
Here’s how it works:
Tell us what you need
It only takes an average of two minutes to tell us who you are and how much money you need. Plus, the process is free, simple and secure.
Compare your options
Depending on your revenue and business needs, you’ll either compare lenders you’re matched with on your own or connect with a member of LendingTree’s small business concierge service who can help walk you through the entire application process.
Get your money
Pick a lender and sign your loan agreement. If you decide to move forward with an alternative lender, you could receive your money in as little as 24 hours, but SBA loans will typically be slower to fund.
Frequently asked questions
Yes. While it can be more difficult to qualify for an SBA loan as a startup company, it’s not impossible.
In fiscal year 2025, most SBA loans went to businesses that had been in operation for two years or more. However, 15.2% of SBA 7(a) loans were given to businesses with less than two years in operation, while an additional 14.6 % went to startups planning to use the loan funds to open their doors. The 504 program saw 14.4% of its approved loans going toward starting a new business, but only 2.1% going to existing businesses under two years old.
If your business doesn’t meet the criteria for an SBA loan, there are other types of small business financing you can consider. Alternative lenders tend to have more flexible eligibility requirements, including more relaxed time in business, annual revenue and credit score criteria.
However, these lenders tend to charge higher interest rates, and terms will likely be shorter than those from SBA lenders. Still, an alternative business loan could be worthwhile if your business needs fast funds and you’re comfortable with the repayment schedule.
All SBA loans require a personal guarantee, which makes you personally liable for your business debt. By signing a personal guarantee, you give the lender permission to come after your personal assets, like your home or savings, to recoup their losses if you default on your loan.
If you’re having trouble keeping up with your SBA loan payments, contact your lender to find out more about your options. While not required, some lenders may be willing to work with you to figure out a new payment schedule — especially if default is the only alternative.
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