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Government Small-Business Loans: SBA Loans, Top Options

Government-backed business loans offer favorable terms but have tough qualifications.
By Ryan Lane, Randa Kriss
Last updated on September 27, 2022
Edited byChristine Aebischer

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Government small-business loans are typically available through banks and other approved lenders, not the government itself. With most of these programs — like the popular SBA loan program — the government backs a portion of the loan and repays the lender if you default.
The government guarantee reduces the risk for lenders and incentivizes them to offer small-business loans with competitive interest rates and flexible terms.
Because of those benefits, government business loans often have strict qualifications. But if you can qualify, they’re a great option to fund or grow a company. Here are some of the best government small-business loans, plus information on alternatives if you aren’t eligible for funding.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 4 government small business loans

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Lender
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Max loan amount
Min. credit score
Next steps

SBA 7(a) loan

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Best for Government small-business loans

$5,000,000650

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SBA Express loan

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Best for Fast government small-business loans

$500,000650

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SBA Microloan

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Best for Government small-business loans for bad credit + Government loans to start a business

$50,000620

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SBA CDC/504 loans

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Best for Government small-business loans for real estate financing

$5,000,000680

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Here are 4 government small business loans

Best for Government small-business loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Fast government small-business loans

U.S. Small Business Administration

Max Amount

$500,000

Min. Credit Score

650

Best for Government small-business loans for bad credit + Government loans to start a business

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

Best for Government small-business loans for real estate financing

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

680

Our pick for

Government small-business loans

SBA 7(a) loans are the most common government small-business loan, offering financing for equipment, working capital, refinancing debt or other business purposes.

SBA 7(a) loan

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
9.75-12.25%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

9.75-12.25%

Depending on your creditworthiness and your business's financials

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Read Review

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Our pick for

Fast government small-business loans

Applying for most government business loans is a lengthy process. But if you need fast funding, SBA Express loans provide up to $500,000, and the SBA responds to your application within 36 hours.

SBA Express loan

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Max Loan Amount
$500,000
Min. credit score
650
Est. APR
12.00-14.00%
SBA Express loans are available up to $500,000 as either a term loan or line of credit.

Max loan

$500,000

Min. Credit score

650

Apr range

12.00-14.00%

Depending on your creditworthiness and your business's financials

SBA Express loans are available up to $500,000 as either a term loan or line of credit.
Read Review

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Our pick for

Government small-business loans for bad credit

Microloans are offered through nonprofit, community-based organizations, which may be more willing to work with you if you have low or poor credit.

SBA Microloan

Read Review

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Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
The average microloan is roughly $13,000, according to the Small Business Administration.

Max loan

$50,000

Min. Credit score

620

Apr range

8.00-13.00%

Depending on your creditworthiness and your business's financials

The average microloan is roughly $13,000, according to the Small Business Administration.
Read Review

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Our pick for

Government loans to start a business

Most lenders will require at least two years in business to get a government-backed loan. However, microloans of up to $50,000 may be available to newer businesses.

SBA Microloan

Read Review

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Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
The average microloan is roughly $13,000, according to the Small Business Administration.

Max loan

$50,000

Min. Credit score

620

Apr range

8.00-13.00%

Depending on your creditworthiness and your business's financials

The average microloan is roughly $13,000, according to the Small Business Administration.
Read Review

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Our pick for

Government small-business loans for real estate financing

SBA CDC/504 loans offer low-cost, long-term financing that you can use to purchase, renovate or construct buildings and facilities.

SBA CDC/504 loans

Read Review

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Max Loan Amount
$5,000,000
Min. credit score
680
Est. APR
2.60-3.20%
You cannot put an SBA CDC/504 loan toward working capital, existing debt or a rental real estate investment.

Max loan

$5,000,000

Min. Credit score

680

Apr range

2.60-3.20%

Depending on your creditworthiness and your business's financials

You cannot put an SBA CDC/504 loan toward working capital, existing debt or a rental real estate investment.
Read Review

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How Much Do You Need?

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Types of government small-business loans

Federal government small-business loans

SBA loans. Perhaps the most well-known type of government business loan, SBA loans are issued by banks and other approved lenders and partially guaranteed by the U.S. Small Business Administration. SBA loans typically have low interest rates and long terms, but can be difficult to qualify for.
There are several SBA loan options to choose from:
  • SBA 7(a) loans. The 7(a) program is the primary type of SBA loan, with $36.5 billion in loans issued in fiscal year 2021, according to the Congressional Research Service. You can receive up to $5 million in funding for day-to-day expenses like payroll, as well as longer-term business costs like equipment financing. Funds are available as term loans or an SBA line of credit.
  • SBA Express loans. A variation of the 7(a) program, Express loans come with a smaller funding maximum, $500,000, but offer quicker processing. If you need a fast business loan, you may be able to get approved for an SBA Express loan within a few days, whereas a 7(a) loan application may take weeks or months to process.
  • SBA CDC/504 loans. These SBA loans also offer funding of up to $5 million; however, CDC/504 loans have strict usage rules compared with other government small-business loans. Their primary use is financing construction or real estate projects. Unlike 7(a) loans, you can’t use an SBA CDC/504 loan for working capital or refinancing debt.
  • SBA Microloans. The SBA offers microloans of up to $50,000 through nonprofit community organizations. Microlenders often focus on assisting traditionally underserved populations, including minority business owners and women business owners, and may have looser eligibility requirements than other government-backed business loans. SBA Microloans can be good options for newer businesses or those with bad credit.
USDA Business and Industry loans. The U.S. Department of Agriculture provides a partial guarantee to lenders (banks, credit unions and other financial institutions) that issue loans to small businesses in rural areas. Businesses in these areas can use the financing for a variety of purposes, including growth and development, machinery and equipment purchases, real estate purchases and debt refinancing.

State and local government small-business loans

Many state and local governments offer financing options for small businesses. Pennsylvania, for example, offers a wide range of government-backed business loans, as well as small-business grants, tax credits and other programs.
You can browse government-backed loans in your state, by visiting your Secretary of State or Department of Economic Development website. USA.gov also offers a state-by-state search to guide you in the right direction.

Government small-business disaster loans

The U.S. government sometimes offers small-business loans to businesses in federally declared disaster areas. SBA disaster loans are issued directly to borrowers from the government, not third-party lenders. You can borrow up to $2 million total.
Disaster loan options include:
  • Economic Injury Disaster Loans. EIDL loans provide flexible working capital to help keep your business afloat until you can operate normally again. The COVID-19 EIDL program is no longer accepting applications or appeals for reconsideration, but there is a list of current declared disasters on the SBA’s website.
  • Business physical damage loans. This financing can help you repair or replace damaged real estate, equipment, machinery or other physical assets.
  • Mitigation assistance. In addition to loan funds, the SBA offers mitigation assistance, which can increase your financing by up to 20% to help you make upgrades so your property is more resilient in the future.
Most COVID-19 government business loan programs have ended. Some state and local governments are still using COVID-19 relief funds to support small businesses, though. Visit government websites in your area to see what options might be available near you.

Other types of government financing

Federal and state governments also provide nonlending initiatives that promote business growth. Here are some options to consider:
  • Small-business grants. Federal, state and local governments offer a range of grant programs that provide free financing to small businesses. Grants.gov is a good resource for researching small-business grants administered by federal government agencies.
  • Small Business Investment Companies. The SBA funds and licenses SBICs, which offer small businesses debt and equity. You can find an investor in your area on the SBA’s website.
  • SBA contracting assistance programs. These programs, like the SBA 8(a) program, help small businesses win federal contracts.

Alternatives to government small-business loans

Government small-business loans are a strong choice for eligible borrowers. But a different type of business loan may be a better fit depending on your business’s qualifications and needs:
  • If you’re a highly qualified borrower. If you have excellent credit, many years in business and strong revenue, you may want to look at bank small-business loans before government options. Banks typically offer the lowest rates on business loans, whereas SBA loan rates have set ranges based on rules established by the federal government.
  • If you’re in a rush. Getting a government small-business loan requires approvals from a lender and the agency providing the guarantee, which can be time-consuming. Consider an online lender if you can’t afford to wait. Some offer funding as quickly as the same or next day. However, that convenience will likely mean a higher interest rate.
  • If you’re just getting started. Businesses that haven’t been around for at least two years and lack strong financials won’t be able to get most government loans, though lenders set their own qualifications. Until your company is more mature, you’ll need to turn to startup business loan options such as credit cards or personal loans.

Compare small-business loans

For a look beyond government business loans, check out NerdWallet’s list of best small-business loans. Our recommendations are based on the market scope and track record of lenders, the needs of business owners and an analysis of rates and other factors, so you can make the right financing decision.
Last updated on September 27, 2022

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