How SBA loans work
A private lender makes the loan. The SBA promises to cover part of the loss if you default.
That guarantee is why SBA loans tend to have lower rates and longer terms than other small business financing. It is also why they take longer. The lender has to document that the loan meets SBA rules.
The main programs
| Program | Used for | Speed |
|---|---|---|
| 7(a) | Working capital, equipment, real estate, refinancing, acquisitions | 3 to 6 months on average |
| Express | The same uses, with a faster and simpler process | As little as 14 days |
| 504 | Major fixed assets such as real estate | Varies |
What you need to qualify
The SBA’s own rules require a for-profit U.S. business that is small under SBA size standards, is creditworthy, and cannot get credit on reasonable terms elsewhere.
On top of that, Kapitus lists:
- A personal credit score of at least 680. In our experience, the files that get approved are above 700
- Established business credit
- Fewer than 500 employees
- Average annual revenue of no more than $7.5 million over the past 3 years
- Your own equity invested in the business
- An SBA-eligible industry
What it costs
The interest rate is the headline. The fees around it are part of the cost.
- Interest. You negotiate the rate with the lender. The SBA sets a ceiling the lender cannot exceed.
- Guarantee fee. The SBA charges a fee based on the guaranteed amount and the term. It resets each federal fiscal year, so ask your lender for the current schedule.
- Commitment and closing fees. Some banks charge a commitment fee up front to hold the loan through underwriting. Packaging, appraisal, title, and closing costs come on top, and they vary by bank.
- Funding and success fees. Some are paid by the bank, some are due from you at closing. A broker or packager who helps assemble the file may be paid by either side. The SBA requires fees paid to any agent to be disclosed on SBA Form 159. Ask to see it.
- Down payment. At least 10%. Up to 30% if your collateral or cash flow is weak.
Know the true cost before you sign. The rate may be great, and often is. Fees sit on top of it. Add every fee, the guarantee fee included, to the interest you will pay over the time you expect to hold the loan, and compare that number across offers. That total is the cost to borrow, and it is the number to decide on.
The trade-off: cost against time
SBA loans are usually among the cheapest ways for a small business to borrow. They are also the slowest and the hardest to get.
| SBA 7(a) | Short-term loan | |
|---|---|---|
| Time to funding | 3 to 6 months | Days |
| Term | Up to 25 years | 6 to 36 months |
| Paperwork | Heavy | Light |
| Fees | Guarantee fee plus bank, packaging, and closing fees. Ask for the total | An origination fee, if any |
| Credit score | 680 published, above 700 in practice | 600 to 680 depending on the lender |
If you can wait and you qualify, start here. If you need money this month, an SBA loan will not arrive in time. A term loan or a line of credit can bridge the gap, and some owners refinance into an SBA loan later.
When it fits
- You are buying real estate, a business, or major equipment.
- You have strong credit and at least a couple of years of financials.
- You can wait months for funding.
When it does not
- You need funds fast.
- Your credit is under 700. The published floor is 680, but approvals run higher.
- You cannot document your finances. Tax returns and financial statements are required.
How to apply
- Fill out our short form.
- A financing specialist reviews whether an SBA loan is realistic for you.
- Gather your documents: tax returns, financial statements, and a debt schedule.
- The lender underwrites the loan and submits it under SBA rules.
- Close and receive funds.
Sources
- U.S. Small Business Administration: 7(a) loans, updated July 27, 2026
- Kapitus: SBA Loans, checked October 12, 2026
- SBA Form 159: Fee Disclosure and Compensation Agreement