SBA 7(a) Loans: A Complete Small Business Guide
Last updated June 6, 2025
If you’ve done even a minimal amount of research into your options for a small business loan
SBA 7(a) loans offer low interest rates and long terms, making them an ideal form of financing for those who can qualify. Plus, they can be used for a wide range of purposes, including working capital, business expansions, real estate purchases, equipment purchases, and more.
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What Is an SBA 7(a) Loan and How Does It Work?
SBA 7(a) loans are business loans available in amounts up to $5 million with term lengths up to 25 years. Interest rates can come in as low as the market prime rate plus 3%.
These SBA loans
The government guarantee makes lending to a small business less risky for banks or credit unions that might not otherwise lend to these borrowers. If the business defaults on the loan, the SBA guarantee ensures that the lender will get 50% to 90% of the loan back.
Although the guarantee motivates lenders to work with small businesses, it can still be hard to qualify for SBA 7(a) loans. Lenders generally require a good personal credit score (690+), two or more years in business, and strong annual revenue for 7(a) loan applications.
Types of SBA 7(a) Loans
Although “SBA 7(a) loan” is often used as a catch-all term, the program actually encompasses multiple loan types. The main differences among the types of 7(a) loans are the maximum loan amounts, maximum SBA guarantee, and intended use of funds.
| Loan Type | Max. Loan Amount | Max. SBA Guarantee | Use of Funds |
|---|---|---|---|
| Standard 7(a) Loan | $5 million | 75% to 85% | Business expansion, working capital |
| 7(a) Small Loan | $350,000 | 75% to 85% | Working capital, smaller financing needs |
| $500,000 | 50% | Time-sensitive financing needs | |
| Export Express Loan | $500,000 | 75% to 90% | Financing for small export businesses |
| Export Working Capital Loan | $5 million | 90% | Working capital for small export businesses |
| International Trade Loan | $5 million | 90% | Long-term financing for businesses that need to better compete with foreign entities |
| SBA CAPLines of Credit | $5 million | 75% to 85% | Working capital needs for commercial builders, seasonal businesses, businesses that are fulfilling government contracts, and businesses with cyclical gaps in cash flow |
SBA 7(a) Loan Rates, Fees, and Terms
The SBA sets standard rates and terms for all 7(a) loans that lenders must follow.
SBA 7(a) Loan Rates
Overall, the interest rate you receive on your SBA 7(a) loan will be based on the size of your loan, the loan term, as well as your business’s qualifications.
That said, the maximum SBA loan rates
If your loan has fixed interest rates, then the monthly installments will remain the same throughout the life of the loan. If your loan has variable interest rates, then the monthly payments will change as market rates change.
Here are the maximum SBA 7(a) loan rates:
| Loan Amount | Max. fixed interest rate | Max. variable interest rate |
|---|---|---|
| $25,000 or less | 15.5% | 14.0% |
| $25,001 to $50,000 | 14.5% | 14.0% |
| $50,001 to $250,000 | 13.5% | 13.5% |
| $250,001 to $350,000 | 12.5% | 12.0% |
| $350,001 or more | 12.5% | 10.5% |
SBA 7(a) Loan Fees
When evaluating the total cost of a 7(a) loan, it’s important to keep in mind that fees are not included in the maximum rates set by the SBA.
Common SBA 7(a) loan fees include:
- Guarantee fee
- Credit check fees
- Packaging fees
- Closing costs
- Appraisal fees (if the loan is to buy real estate)
- Late payment fees
Although some fees will vary based on your lender, you’ll likely have to pay the SBA guarantee fee. This is the fee that the SBA charges your lender to guarantee the loan, and it’s typically passed on to the borrower.
The guarantee fee ranges from 0.25% to 3.75% depending on the size and term of the loan. The key thing to remember is that the fee is calculated on the guaranteed loan amount, not on the total loan amount.
| Loan Amount | Term of 12 months or less | Term greater than 12 months |
|---|---|---|
| $150,000 or less | 0.25% | 2% |
| $150,001 to $700,000 | 0.25% | 3% |
| $700,001 to $5 million | 0.25% | 3.5% up to and including $1 million, plus 3.75% over $1 million |
SBA 7(a) Loan Repayment Terms
The term lengths you’ll receive for an SBA 7(a) loan will depend on what you plan on using the funding for. Similar to 7(a) interest rates, the SBA sets maximum terms that lenders must abide by:
- Up to 25 years for real estate
- Up to 10 years for equipment
- Up to 10 years for working capital or inventory loans
SBA CAPLines of credit have different guidelines for term lengths. These lines of credit have maximum terms of 10 years and the Builders line of credit has a maximum term of five years.
Your SBA 7(a) lender will determine your specific repayment schedule.
SBA 7(a) Loan Requirements
To qualify for an SBA 7(a) loan, you’ll have to meet requirements from the SBA and your lender. Although some requirements vary from lender to lender, the following general eligibility criteria apply across the board:
- Your business needs to be officially registered and operating in the U.S. as a for-profit business.
- Your business needs to meet the SBA’s definition of a small business.
- Your business needs to be entirely owned by U.S. citizens, U.S. nationals or unconditional lawful permanent residents (LPRs).
- You, as the business owner, need to have invested your own time and/or money into the business.
- You must be able to prove your need for the financing and show that you’ve been unsuccessful accessing funds elsewhere. (In other words, the SBA can’t be your first stop on the journey to a business loan.)
In addition to these standard SBA requirements, there are also common criteria that lenders use to evaluate your ability to repay a loan:
- Personal credit score: Lenders usually want to see a FICO score of at least 690.
- Revenue/profitability: You should have strong business revenue and ideally be profitable, although the SBA may make exceptions for new businesses with strong credit.
- Existing debt: If you have existing debt, you need to be able to show that you can take on additional financing. For loans over $500,000, the SBA prefers a debt service coverage ratio (DSCR) of at least 1.15.
- Collateral: The more valuable assets you have that you can put down as security, the stronger your application will be.
- Time in business: Many lenders require that you have two or more years in business in order to qualify.
Use our guide to learn more about SBA loan requirements
How to Apply for an SBA 7(a) Loan
The competitive rates and terms of SBA 7(a) loans make them one of the best options for small business financing. If you think you can qualify for a 7(a) loan, you can follow these steps to apply:
1. Choose an SBA 7(a) lender.
Many national, regional, and local banks and credit unions offer SBA 7(a) loans. You’ll want to look for an SBA preferred lender, which means they have experience issuing these loans and can most effectively help you through the application process.
You can start by contacting a bank you have a relationship with, or use the Lender Match tool on the SBA website to get connected with lenders in your area. Online loan marketplaces like Fundera can also help with this.
2. Collect your documentation.
After you’ve found the right lender for your business, gather all the documents you’ll need to submit your SBA 7(a) loan application. This can be one of the most time-consuming parts of the application process; stay organized, and make sure you understand exactly what your lender requires.
Once again, some of the documents you’ll need to provide are required by the SBA, while others will vary from lender to lender. Here are some of the documents you’ll likely need to provide:
SBA forms
- Form 1919: Borrower Information Form
- Form 912: Statement of Personal History
- Form 413: Personal Financial Statement
- Form 148 or 148L: Unlimited/Limited Personal Guarantee
General documentation
- Business financial statements (profit and loss statement, balance sheet, and cash flow projections)
- Business certificate, license, or permits
- Ownership and affiliations information
- Personal and business tax returns
- Bank statements
- Resumes for owners or key business personnel
- Current business debt schedule (if applicable)
- Business lease (if applicable)
- Collateral information (if applicable)
3. Complete and submit your application.
With all of your documents ready, you can complete and submit your 7(a) loan application to your lender. Once your application has been submitted, you’ll need to wait for approval.
If your lender is an SBA preferred lender, they will be able to make a final credit decision without sending the application to the SBA—meaning you’re likely to get a much faster approval. Non-preferred lenders, on the other hand, will have to get SBA approval first, meaning a slower timeline.
Generally, from the beginning of the application process to closing, the SBA loan timeline takes anywhere from 60 to 90 days.
4. Review your loan agreement and complete the closing process.
After you receive approval from your SBA 7(a) lender, you’ll be able to review your loan agreement—which includes the rates, terms, repayment schedule, and all other details of your loan. If you have any questions about the agreement, be sure to ask your lender. You may even consider reviewing the agreement with a business lawyer or advisor.
Once you’ve signed the agreement, the lender can start the closing process. Then, you’ll receive your funds and start your repayments based on the schedule indicated in your loan agreement.
Fundera Can Help
If you’re ready to find an SBA lender and apply for a loan, we can help you find the best fit for your business. Click the button below to answer a few simple questions—no impact to your credit report—and we’ll show you the loans you qualify for, free of obligation.
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