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How to Get a Small Business Loan (SBA Guide)
The SBA guarantees billions in small business loans every year. These are the most affordable loans for startups and growing businesses " — but the application process can be confusing. Here's everything you need to know.
Types of SBA Loans
| Loan Type | Max Amount | Use Case | Term |
|---|---|---|---|
| SBA 7(a) | $5,000,000 | Working capital, equipment, real estate | Up to 25 years |
| SBA 504 | $5,500,000 | Fixed assets, real estate, heavy equipment | 10-25 years |
| SBA Microloan | $50,000 | Small startups, inventory, supplies | Up to 6 years |
| SBA Express | $500,000 | Fast approval for various uses | Up to 25 years |
SBA 7(a) Loan Requirements
- Credit score: Minimum 680 (700+ preferred)
- Business plan: Detailed plan with financial projections
- Down payment: 10-20% of the loan amount
- Collateral: May be required for larger loans
- Time in business: At least 2 years preferred
- Annual revenue: $100,000+ minimum
Pro tip: The SBA doesn't lend directly " — you apply through an SBA-approved lender like a bank or credit union. Shop around because rates and terms vary between lenders.
Step-by-Step Application Process
- Gather documents: Tax returns, bank statements, business plan, financial statements
- Find an SBA lender: Use the SBA Lender Match tool at sba.gov
- Complete the application: SBA Form 1919 (Borrower Information)
- Wait for review: 7(a) loans take 30-90 days on average
- Close the loan: Sign documents, receive funds
SBA Loan Rates (2026)
| Loan Type | Base Rate | Typical Total Rate | Fee |
|---|---|---|---|
| 7(a) under $50K | Prime + 2.25% | 9.5-12% | 0-3.5% |
| 7(a) $50K-$350K | Prime + 2.75% | 10-13% | 3-4% |
| 7(a) over $350K | Prime + 3.25% | 10.5-14% | 3.5-4.5% |
| 504 | ~6-7% | 6-7.5% | Various |
⚠️ Warning:
- Don't apply for multiple SBA loans simultaneously " — each application dings your credit
- SBA loans require personal guarantees " — you're personally liable if the business fails
- The process is slow " — don't apply if you need money in 30 days or less
- Missing payments can damage your personal credit score
Alternatives to SBA Loans
- Online lenders (Kabbage, Fundbox): Faster approval, higher rates
- Business lines of credit: Flexible borrowing, pay interest only on what you use
- Equipment financing: Use the equipment as collateral
- Revenue-based financing: Repay as a percentage of monthly revenue
The bottom line: SBA loans offer the lowest rates and longest terms for small businesses. Start preparing your documents 6 months before you need the money. Build your credit score above 700, have 2 years of tax returns ready, and write a solid business plan. Apply through at least 2-3 lenders to compare offers.