SBA Loans for Small Businesses

What is an SBA loan?

An SBA loan is a small business loan issued by a bank, credit union, or non-bank lender — and partially guaranteed by the U.S. Small Business Administration. The SBA itself doesn't lend the money. It backs a portion of the loan so the lender takes on less risk, which is why SBA loans typically come with longer terms, lower down payments, and more flexible underwriting than a traditional commercial loan.

In practice that means owners can finance things — like real estate, equipment, an acquisition, or working capital — over five to twenty-five years instead of one to five, with a much smaller cash contribution up front.

The two programs most owners use

SBA 7(a) — the flexible workhorse

The 7(a) is the SBA's flagship loan and the one most small businesses end up using. It can fund almost any legitimate business purpose:

• Working capital and seasonal cash flow
• Equipment, technology, and vehicles
• Refinancing existing higher-cost business debt
• Buying a business or partner buyouts
• Owner-occupied commercial real estate

Loan amounts go up to $5 million, with terms commonly ranging from ten years for working capital up to twenty-five years for real estate. Rates are typically variable, tied to the prime rate.

SBA 504 — long-term, fixed-rate real estate and equipment

The 504 is built for one job: financing owner-occupied commercial real estate and large fixed assets. It's structured as two loans working together — a bank loan covering roughly half of the project, and a Certified Development Company (CDC) loan, backed by the SBA, covering most of the rest. The owner typically contributes around 10 percent.

The big draw is a long, fixed-rate component on the CDC piece — often twenty or twenty-five years. For owners buying their building or major equipment, that predictability matters.

Who qualifies?

Eligibility is more reasonable than most owners assume. At a high level, an SBA-eligible business is:

• A for-profit business operating in the United States
• Within SBA size standards (most small businesses are well inside them)
• Able to demonstrate repayment ability from cash flow
• Owned by people with reasonable personal credit and no disqualifying legal issues
• Not in an excluded industry (e.g. passive real estate, lending, gambling)

Lenders add their own overlays — credit score floors, time in business, industry preferences — so two SBA lenders can give very different answers on the same file. That's the part where having an advisor matters: matching the file to the right lender saves weeks.

What it actually costs

SBA loans aren't free, but they're usually the lowest-cost structured option a small business can access. Expect:

• Interest rate: typically prime + 2.0% to + 3.0% on 7(a), with fixed long-term rates on the 504 CDC piece
• SBA guarantee fee: rolled into the loan, varies by loan size
• Down payment: often 10% for real estate or acquisitions; sometimes 0% for working capital
• Term: 10 years for working capital, up to 25 years for real estate

How to prepare before you apply

The single biggest difference between a 90-day close and a 9-month slog is preparation. Before approaching a lender, have these ready:

• The last three years of business tax returns
• The last three years of personal tax returns for each 20%+ owner
• Year-to-date profit & loss and balance sheet
• A current debt schedule
• A clear, specific use of funds
• A short narrative on the business and why now

Our complimentary Funding Readiness Checklist walks through exactly what to organize.

Is an SBA loan right for you?

An SBA loan is often the right fit when you need a meaningful amount of capital, want a long term, and have time for thoughtful underwriting. It's usually not the right fit when you need money this week, or when the use of funds is short-term and opportunistic.

If you're not sure, that's exactly the kind of question a concierge-style conversation is built for — no pressure, no obligation, just clarity.