An SBA loan is a small business loan partially guaranteed by the U.S. Small Business Administration — a federal agency dedicated to supporting American small business growth and resilience. The SBA does not lend money directly; instead, it guarantees a portion of loans made by approved lenders, reducing lender risk and enabling more favorable terms for borrowers. SBA loans are available for a wide range of business purposes including working capital, equipment purchase, business acquisition, real estate purchase or improvement, and refinancing of existing business debt. The guarantee percentage and terms vary by program — the 7(a) program guarantees up to 85% of loans up to $150,000 and 75% of larger loans, while the 504 program is structured as a partnership between a bank and a Certified Development Company (CDC).

The SBA 7(a) is the most flexible and widely used SBA program — available for working capital, equipment, business acquisition, partner buyouts, real estate, and refinancing. Loan amounts up to $5 million, terms up to 25 years for real estate and 10 years for working capital, and variable or fixed rate options make the 7(a) the go-to program for most small business financing needs. The SBA 504 program is specifically designed for the purchase of fixed assets — primarily owner-occupied commercial real estate and major equipment — and features a unique structure: approximately 50% of the project cost is financed by a conventional lender, 40% by a CDC using SBA-backed debentures, and 10% by the borrower. The 504 offers long-term fixed rates on the CDC portion, making it particularly attractive for real estate acquisitions where rate certainty is a priority. Our advisors will identify which program best serves your business objectives before approaching any lender.

SBA loans are designed for for-profit small businesses that meet SBA size standards, operate in eligible industries, and have a demonstrated need for financing that cannot be fully met on reasonable terms through conventional lending. They are particularly well-suited for established businesses seeking to acquire owner-occupied commercial real estate, businesses purchasing equipment or funding expansion with limited collateral, entrepreneurs acquiring existing businesses or franchise operations, and companies that have been declined for conventional financing due to limited collateral or shorter operating history. SBA loans are not available for passive real estate investment — the borrower must occupy and operate from the property for real estate transactions.

SBA loan eligibility requires the business to be for-profit, meet SBA size standards for its industry, be located in the United States, have reasonable owner equity invested, and demonstrate that financing is not otherwise available on reasonable terms. Personal guarantees from all owners with 20% or more ownership are required. Common documentation includes two to three years of business and personal tax returns, year-to-date financial statements, a business plan (for startups and acquisitions), purchase agreements (for acquisitions and real estate), and collateral information. Credit score requirements vary by lender but typically start at 650 for most SBA programs. The SBA guarantee fee — a one-time charge based on the guaranteed portion of the loan — applies to most programs and can be financed into the loan.

SBA loans offer compelling advantages for eligible businesses: longer repayment terms than conventional business loans (up to 25 years for real estate), lower down payment requirements (as low as 10%), government-backed guarantees that enable approval for businesses that might not qualify conventionally, and competitive interest rates tied to the prime rate with SBA-regulated spread caps. The primary considerations include a longer and more documentation-intensive approval process than conventional lending, personal guarantee requirements, restrictions on eligible business types and uses, and SBA guarantee fees that add to the cost of borrowing. For the right business at the right moment, an SBA loan is an exceptional tool — our advisors ensure you are approaching the right program, with the right lender, with a complete and well-prepared application.