SBA 7a Loan Program
Each year thousands of entrepreneurs obtain SBA 7a loans to pursue their American dream. An overview:
| Loan Size | Up to $5,000,000. |
| Loan Term | 10 years for non-real estate loans; 25 years for real estate loans. |
| Interest Rates | SBA interest rates are slightly higher than conventional loans. Rate is negotiated with SBA lender and subject to SBA max interest rate. Learn more about SBA interest rates –> |
| Use Loan of Proceeds | Buy a business, real estate, equipment, debt refi, partner buyout or buy-in, franchise opening, and working capital are most common. |
| Down Payment | 10% to 20% down payment is common, but SBA and its lenders are enacting lower thresholds in August 2023. |
| Cash Flow | Profits (EBITDA) of at least 115% of SBA loan payment. SBA loan payment calculator –> |
| Credit Score | 680+ is ideal. 640 – 670 is borderline. Under 640 unlikely. SBA credit score insights –> |
| Collateral | None required but lender must secure all available collateral. |
Top SBA Lenders
SBA loans versus traditional commercial loans
SBA loans are designed to provide access to financing for borrowers who may not qualify under more stringent underwriting standards of traditional commercial and industry (C&I) loans. On average, SBA loans have slightly higher interest rates than C&I loans but offer numerous benefits to otherwise not financeable borrowers, such as lower monthly payments and reduced collateral and no loan covenants.
| SBA Loan | Traditional Loan | |
| Down Payment* | 10% – 20% | 20% + |
| Term (in years) | 10 or 25 | 5 to 7 |
| Collateral | None | Fully collateralized |
| Loan Covenants | None | Many (learn about covenants) –> |
* A new SOP from the SBA to be enacted 8/1/23 should further reduce the down payment requirements for SBA borrowers.
