SBA loans explained

The cheapest money you can borrow

The SBA doesn't lend directly. They guarantee loans made by banks, so banks take less risk, and you get better rates and longer terms than conventional loans.

SBA loans are slow and paperwork-heavy. But the numbers justify it: rates of 7 to 10% instead of 20 to 40% from alternative lenders, terms up to 25 years, loan amounts up to $5 million.

Here are the main programs and which one fits.

Key points

• SBA 7(a) is the main program. Up to $5M. Terms up to 10 years working capital, 25 for real estate. Rates 7.25 to 9.75%.
• SBA 504 for real estate and major equipment. Fixed-rate, long-term (up to 25 years). Owner-occupied commercial real estate or heavy machinery.
• SBA Microloans cover up to $50,000. Rates 8 to 13%. Mandatory business training. Great for first-time borrowers.
• Tighter in 2025. Minimum SBSS of 165, 100% US ownership (narrow exceptions), 10% equity for startups.
• Expect 30 to 90 days to close. Not fast money. Need it in 2 weeks? SBA isn't the answer. Plan 60 to 90 days minimum.