SBA Loans: What They Are and How to Get One

An SBA loan is a type of small business financing that's partially guaranteed by the U.S. Small Business Administration. Because the federal government backs a portion of each loan, partner lenders (banks, credit unions, and online lenders) can offer lower interest rates, longer repayment terms, and smaller down payments than you'd find with conventional business loans.

The SBA itself doesn't lend money directly to business owners in most cases. Instead, it sets guidelines and guarantees a percentage of the loan, which reduces the risk for lenders. If a borrower defaults, the SBA covers part of the loss. That guarantee is what makes these loans accessible to businesses that might not qualify for traditional bank financing on their own.

SBA loans are one of the most popular funding options for small businesses in the United States. In fiscal year 2024, the SBA approved over 70,000 7(a) loans totaling more than $31 billion. The programs serve businesses across every industry, from restaurants and retail shops to tech startups and manufacturing firms.

Looking for a traditional business loan instead? Compare business loans here.

The SBA offers several distinct loan programs, each designed for different business needs. Here's a breakdown of the main options available in 2026.

The 7(a) program is the SBA's flagship lending program and the most widely used. It provides financing for a broad range of business purposes, including working capital, equipment purchases, debt refinancing, business acquisitions, and commercial real estate.

Maximum loan amount: $5 million

Repayment terms: Up to 10 years for working capital, up to 25 years for commercial real estate

Down payment: As low as 10%, though startups may need more

SBA guarantee: 85% on loans up to $150,000, 75% on loans above $150,000

The 7(a) program includes several subtypes. Standard 7(a) loans handle amounts from $500,001 to $5 million. SBA Express loans offer a faster approval process (response within 36 hours) for amounts up to $500,000, though the SBA guarantee drops to 50%. There's also the SBA 7(a) Small Loan for amounts up to $350,000, which was reduced from $500,000 in recent rule changes.

The 504 program is specifically designed for purchasing major fixed assets like commercial real estate and heavy equipment. These loans are structured as a partnership between a Certified Development Company (CDC), a conventional lender, and the borrower.

A typical 504 loan structure works like this: a bank covers 50% of the project cost, a CDC (backed by the SBA) covers 40%, and the borrower puts down 10%. This structure keeps down payments low while providing long-term, fixed-rate financing.

Maximum loan amount: Up to $5.5 million (CDC portion)

Repayment terms: 10, 20, or 25 years

Interest rates: Fixed rates tied to Treasury securities, currently around 5.7% to 5.9% on the CDC portion

504 loans cannot be used for working capital, inventory, or debt refinancing. They're strictly for fixed assets that promote business growth and job creation.

The Microloan program provides smaller loans through nonprofit intermediary lenders. These are particularly useful for startups, newer businesses, and entrepreneurs who need modest amounts of capital to get going.

Maximum loan amount: $50,000 (average loan is about $13,000)

Repayment terms: Up to 7 years

Interest rates: 8% to 13%, set by the intermediary lender

Microloans can be used for working capital, inventory, supplies, furniture, fixtures, machinery, and equipment. They cannot be used to purchase real estate or refinance existing debt.

One advantage of the Microloan program is that credit requirements are often more flexible than other SBA programs. Many intermediary lenders work with borrowers who have limited credit history, making this a solid entry point for first-time business owners.

Unlike other SBA programs, disaster loans are funded directly by the SBA rather than through partner lenders. They help businesses, homeowners, and renters recover from declared disasters.

There are three main types:

Physical Disaster Loans cover repairs or replacement of property damaged by a declared disaster. Businesses can borrow up to $2 million.

Economic Injury Disaster Loans (EIDL) provide working capital to small businesses that suffered economic injury due to a disaster, even if their property wasn't physically damaged. The maximum is $2 million.

Military Reservist Economic Injury Loans help businesses that lose a key employee called to active duty. These provide working capital to cover operating expenses until the employee returns.

Disaster loan interest rates are typically much lower than other SBA loans, often below 4% for businesses and even lower for homeowners.

For businesses involved in international trade, the SBA offers specialized export financing through three programs:

Export Express provides up to $500,000 with a faster turnaround, designed for businesses that need quick access to capital for export activities.

Export Working Capital offers up to $5 million in short-term working capital to fulfill export orders, purchase inventory for export, or finance accounts receivable from international sales.

International Trade Loans provide up to $5 million in long-term financing for businesses that are expanding into new export markets or have been adversely affected by import competition.

These programs follow similar rate structures to the standard 7(a) program, with rates based on the current prime rate plus a lender markup.

SBA loan interest rates vary by program, loan size, and repayment term. Most 7(a) loan rates are variable and tied to the Wall Street Journal Prime Rate, which stands at 6.75% as of early 2026.

Lenders add a markup (called a "spread") on top of the base rate, and the SBA caps how much they can charge. Here's what that looks like in practice:

504 loan rates are fixed and pegged to Treasury yields rather than the prime rate. Current effective rates on the CDC portion fall roughly between 5.7% and 5.9% depending on the term length, making 504 loans significantly cheaper for long-term fixed-asset purchases.

Microloan rates range from 8% to 13% and are set by individual intermediary lenders. Since these are smaller loans with higher administrative costs per dollar, the rates tend to be at the higher end of SBA pricing.

SBA Express rates follow the same cap structure as standard 7(a) loans, with average rates around 10.33%.

SBA loan eligibility has specific criteria that every applicant must meet. Here are the requirements as of 2026:

Certain businesses and individuals are automatically ineligible for SBA financing:

• Businesses involved in illegal activities (including cannabis, which remains federally illegal)
• Gambling operations (unless limited to less than one-third of revenue)
• Real estate investment or speculation
• Businesses with owners who are currently incarcerated, on probation, or on parole
• Companies where any owner has previously defaulted on a federal loan
• Lending or investment companies
• Pyramid or multi-level marketing schemes
• Businesses primarily engaged in political or lobbying activities

If your business has been denied an SBA loan, it doesn't necessarily mean you can't get funded. Many traditional and online lenders offer small business loans without SBA involvement.

The SBA loan application process is more involved than a typical business loan, but the favorable terms make it worth the effort for many borrowers. Here's what to expect:

Understanding how SBA loans compare to conventional business financing helps you decide which path makes sense for your situation.

SBA loans offer better rates and terms, but the tradeoff is time and paperwork. If you need funding fast, a conventional business loan or line of credit might be a better fit even if the rate is higher. If you can plan ahead and have your financials in order, an SBA loan will almost always save you money over the life of the loan.

Getting an SBA loan as a startup is harder than for an established business, but it's not impossible. The SBA doesn't technically require a minimum time in business for all programs, though most lenders prefer at least two years of operating history.

Startups have the best shot with these programs:

Microloans are the most startup-friendly option. Many intermediary lenders specifically target new businesses and entrepreneurs from underserved communities. Loan amounts up to $50,000 can cover initial inventory, equipment, and working capital.

7(a) loans are possible for startups if you bring a strong business plan, relevant industry experience, good personal credit, and a meaningful down payment (often 20% to 30% for startups versus 10% for established businesses).

504 loans can work for startups purchasing commercial real estate or equipment, but the down payment requirement typically jumps from 10% to 15% or even 20% for new businesses.

Startups should also explore SBA-affiliated resources like SCORE mentoring, Small Business Development Centers (SBDCs), and Women's Business Centers for free guidance on preparing a loan-ready business plan.

While the SBA doesn't offer a separate "women's loan program," it does provide targeted resources through the Office of Women's Business Ownership (OWBO). The OWBO operates a network of Women's Business Centers across the country that offer training, counseling, and help with loan applications.

Women entrepreneurs can access all standard SBA loan programs on equal terms. Some lenders and CDCs also participate in programs specifically aimed at increasing capital access for women-owned businesses.

The SBA also certifies Women-Owned Small Businesses (WOSB) for federal contracting opportunities, which can help grow revenue and strengthen future loan applications.

Several significant changes have taken effect recently that impact SBA loan eligibility and terms:

Citizenship requirement (March 2026): All direct and indirect owners of an SBA borrower must now be U.S. citizens or U.S. nationals. Lawful permanent residents (green card holders) are no longer eligible for any ownership stake in an SBA-financed business.

7(a) Small Loan cap reduced: The maximum for SBA 7(a) Small Loans dropped from $500,000 to $350,000, pushing more borrowers into the standard 7(a) process with additional documentation requirements.

SBSS scoring changes: The SBA is discontinuing the SBSS (Small Business Scoring Service) requirement for certain small 7(a) loans, giving lenders more flexibility to use traditional commercial credit analysis.

Fee waivers for manufacturers: Through September 30, 2026, upfront fees are waived on 7(a) manufacturing loans up to $950,000, and both upfront and annual service fees are waived on all 504 manufacturing loans.

Agency restructuring: The SBA has undergone significant staffing reductions as part of federal efficiency initiatives, which may affect processing times and direct support services.

SBA loans remain one of the best financing options available to small businesses in the United States. The combination of government-backed guarantees, competitive interest rates, and flexible terms makes them attractive for everything from launching a new venture to expanding an established company.

The key is matching the right program to your needs. Use a 7(a) loan for general business purposes, a 504 loan for major fixed-asset purchases, and a microloan if you need a smaller amount to get started. Just be prepared for a thorough application process and plan for 30 to 90 days of processing time.

If you're ready to explore your options, start by checking your eligibility and connecting with an SBA-approved lender through the SBA's Lender Match tool.