SBA 7(a) loans
A business loan of up to $5 million from a bank or other lender, with part of it guaranteed by the SBA, for businesses that cannot get the credit they need on reasonable terms elsewhere.
- Personal guarantee likely
- Secured on assets
- Your home or other personal assets
How it works
The SBA does not lend the money. It guarantees part of a loan made by a bank or another lender, which makes the lender more willing to say yes. You apply to the lender and work with the lender, not the SBA. The SBA's Lender Match tool can put you in touch with lenders that take part.
- Amount: up to $5 million. SBA Express loans, which lenders approve under their own procedures, are up to $500,000.
- Guarantee: the SBA guarantees up to 85% of loans of $150,000 or less and up to 75% of larger loans (50% for SBA Express).
- Uses: working capital, machinery and equipment, furniture and supplies, buying or improving real estate, refinancing business debt, and buying all or part of a business.
- Term: up to 10 years, or up to 25 years when the loan pays for real estate or equipment that lasts longer than 10 years.
- Interest: agreed with the lender, fixed or variable, but capped by the SBA at a base rate (usually the prime rate) plus 6.5 percentage points for loans of $50,000 or less, 6 points up to $250,000, 4.5 points up to $350,000 and 3 points above that.
- Fees: the lender pays the SBA an upfront guaranty fee and may pass it on to you: at most 2% of the guaranteed part for loans of $150,000 or less, 3% up to $700,000, and 3.5% of the first $1 million guaranteed plus 3.75% of the rest for larger loans. The SBA can set lower fees for a year.
Guarantees and collateral: everyone who owns 20% or more of the business must personally guarantee the whole loan. Small loans of $50,000 or less need no collateral under SBA rules. For a standard 7(a) loan, the lender must take the business's available fixed assets, such as real estate and equipment, and if they do not cover the loan, a lien on equity in the owners' personal real estate, such as a home, when that equity is at least 25% of its value. A loan must not be turned down only because collateral is short.
Who can borrow: the SBA's current rulebook (SOP 50 10 8.1, in force from October 1, 2026) limits its loans to businesses whose owners, direct and indirect, and guarantors are all US citizens or US nationals living in the US. A business in operation for a year or less must put in at least 10% of the project's costs itself.
Upsides and downsides
Upsides
- Long terms, up to 25 years for real estate, keep monthly payments lower
- The SBA caps the interest rate and the guaranty fee
- Loans of $50,000 or less need no collateral under SBA rules
- Can pay for buying a business or refinancing existing debt
Downsides
- Every owner of 20% or more must guarantee the whole loan personally
- Only for businesses that cannot get the credit on reasonable terms elsewhere
- Not open to a business with any owner or guarantor who is not a US citizen or US national, including green card holders
- More paperwork and checks than an ordinary bank loan, including tax records checked with the IRS
- The guaranty fee and other costs add to the interest
Risks
- If the business cannot repay, the lender can pursue the guarantors' personal assets
- When business assets do not cover a standard 7(a) loan, the lender takes a lien on your home or other real estate if you have enough equity in it
- With a variable rate, payments rise when the prime rate rises
What it costs
- How it is priced
- Interest set by the lender, capped by the SBA at the prime rate (or another base rate) plus 3 to 6.5 percentage points depending on loan size
- Costs that are easy to miss
- An upfront guaranty fee of up to 3.75% of the guaranteed part, often passed on to you
- On loans of 15 years or more, a fee of 5%, 3% or 1% of the amount if you prepay 25% or more in the first, second or third year
- The lender's out-of-pocket costs, such as appraisals, environmental reports and filing fees
SBA Express loans are up to $500,000. The SBA guarantees up to 85% of loans of $150,000 or less and up to 75% of larger ones.
Have a quote? True cost of a loan: work out the APR and total cost
Applying to an SBA program? Is my business small?: check whether your business counts as small
Does it fit?
Could fit when
- A bank has turned you down, or will lend only on terms you cannot meet
- You need a long-term loan for equipment, property or buying a business
- You need up to $5 million for working capital, growth or refinancing
Unlikely to fit when
- The business grows, makes, processes, distributes or sells marijuana or marijuana products, for medical or recreational use, even where the state allows it
- The business earns much of its revenue from gambling, adult content, or political or lobbying work (the SBA's limits are more than a third, more than 5% and more than half of revenue)
- You need more than $5 million
- The owners will not give personal guarantees (owners of 20% or more must)
- You need the money within days
- Any owner or guarantor is not a US citizen or US national living in the US
Who can use it
- Business types: Sole proprietorship, Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative
- An operating business, run for profit, located in the US, that is small under the SBA's size standards
- It cannot get the credit it needs on reasonable terms from private lenders without the SBA's help
- It is creditworthy and can show it is able to repay
- Every owner, direct or indirect, and every guarantor is a US citizen or US national living in the US
- Every owner of 20% or more personally guarantees the loan in full
- A business in operation for a year or less puts in at least 10% of the project's costs
Not available for: Nonprofits; Businesses mainly engaged in lending, such as banks, finance companies and factors; Passive businesses owned by developers and landlords; Businesses earning more than a third of their revenue from legal gambling; Any activity that is illegal under federal, state or local law; Businesses mainly engaged in political or lobbying activities; Speculative businesses; Businesses that grow, make, process, distribute or sell marijuana or marijuana products, for medical or recreational use, even where the state allows it.
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all government-backed and community lending
0%
0 of 11 ticked
- SBA Form 1919
- Personal financial statements
- Financial statements
Regulation and protections
Regulators: U.S. Small Business Administration (SBA); Consumer Financial Protection Bureau (CFPB).
Who runs it: Federal program.
SBA rules cap the interest rate and guaranty fee and set the longest term. The Equal Credit Opportunity Act (Regulation B) covers business credit: if your business had sales of $1 million or less last year, the lender must tell you its decision within 30 days of a complete application and, if it turns you down, give you the reasons or tell you how to ask for them.
Federal Truth in Lending rules (Regulation Z) do not cover business loans, so federal law does not require the lender to show you an annual percentage rate. Ask for the rate, fees and total cost in writing.
Types of provider: Banks, credit unions and other lenders that take part in the SBA's 7(a) program.
SBA 7(a) lenders that lend across the country: 12 examples in the directory · chosen from an official list by a stated rule, never for payment
Also consider
What has changed
- Marijuana businesses, medical or recreational, are listed as not eligible even where the state allows them (SOP 50 10 8.1), and the fit finder now says so.
- Checklist now follows SOP 50 10 8.1: SBA Forms 1919 and 413, 3 years of financial statements, a debt schedule, IRS Form 4506-C, collateral and the articles.
Sources
- SBA: 7(a) loans · checked October 17, 2026
- SBA: 7(a) terms, conditions and eligibility (amounts, guaranty, maturity, rate caps, fees, prepayment) · checked October 17, 2026
- SBA: SOP 50 10 8.1, Lender and Development Company Loan Programs (effective October 1, 2026) · checked October 20, 2026
- 13 CFR 120.110: businesses that are ineligible for SBA business loans · checked October 17, 2026
- 12 CFR 1002.9 (Regulation B): notifications, including to business credit applicants · checked October 17, 2026
- 12 CFR 1026.3 (Regulation Z): exempt transactions, including business credit · checked October 17, 2026
Something wrong or out of date?
Every fact here comes from a source, and rules and limits change. Email what looks wrong to data@fundladder.uk and, if you can, where you saw the right information. We use your email only to check the correction and reply. Privacy