How to Get a Business Loan From the Government

If you’re looking for a small-business loan with low rates and long repayment terms, a government loan could be a top option. Most of these loans aren’t issued directly by the federal government. Instead, they’re provided by banks, credit unions and other approved lenders, and are partially guaranteed by agencies like the U.S. Small Business Administration (SBA).

That guarantee reduces risk for lenders by promising to repay part of the loan if you default, allowing them to offer more competitive rates and terms. Still, getting a government business loan can take time and requires strong credentials.

Types of government business loans

Despite the time commitment, government loans can offer affordable funding for many small businesses. Here are the main types and how they work:

• Loan amount: Up to $5 million.

• Interest rates: 10% to 15%.

• Repayment terms: Up to 10 or 25 years, depending on use.

• Best for: Working capital, business expansion, purchasing equipment or supplies.

SBA 7(a) loans are the most popular type of government business loans. These loans are issued by banks and credit unions and partially guaranteed by the SBA. In fiscal year 2025, the SBA guaranteed 78,078 7(a) loans for a total of over $37 billion^[0]

• Loan amount: Up to $5 million ($5.5 million for select projects).

• Interest rates: Tied to five- or 10-year U.S. Treasury notes; typically around 5% to 7% of the amount financed.

• Repayment terms: 10, 20 or 25 years, depending on use.

• Best for: Large equipment or real estate purchases.

SBA 504 loans are designed to promote business growth and job creation through the purchase or upgrade of major fixed assets. Unlike other SBA loans, these loans come from three sources:

• A third-party lender (50%).

• A Certified Development Company (CDC) (40%).

• The borrower (10%).

» MORE: SBA 7(a) loan vs 504 loan

• Loan amount: Up to $50,000.

• Interest rates: Vary, but typically range from 8% to 13%.

• Repayment terms: Up to seven years.

• Best for: Traditionally underserved businesses (e.g. startups, woman-owned companies, borrowers with lower credit scores).

SBA microloans are funded by the SBA and issued through its network of intermediary lenders, typically nonprofit and community organizations. These loans are generally easier to qualify for than other SBA programs, making them a good fit for borrowers who can’t get a traditional business loan.

SBA microloans can be used for working capital or to purchase inventory, supplies, furniture, fixtures, machinery or equipment. Although you can apply for a loan up to $50,000, the average microloan amount in fiscal year 2025 was only $16,145^[0]

• Loan amount: Up to $2 million.

• Interest rates: Up to 4% or 8%, depending on loan type and credit access.

• Repayment terms: Up to 30 years.

• Best for: Businesses recovering from physical or economic damage caused by a declared disaster.

💡 Note: Only SBA disaster loans are issued directly by the SBA.

SBA disaster loans are designed to help victims of a declared disaster, such as hurricanes or wildfires. There are three types of disaster loans available to small businesses:

• Business physical disaster loans.

• Economic injury disaster loans (EIDL).

• Military reservists economic injury disaster loans (MREIDL). 

• Loan amount: Up to $10 million.

• Interest rates: Varies by lender.

• Repayment terms: Seven, 15 or 30 years, depending on use.

• Best for: Creditworthy businesses located in rural areas (i.e. population of 50,000 residents or less).

The U.S. Department of Agriculture (USDA) provides a partial guarantee to lenders that issue loans to small businesses in rural areas. Eligible businesses can use the financing for growth and development, machinery and equipment purchases, real estate purchases and in some cases, debt refinancing.

The most widely used USDA business loan is the Business & Industry (B&I) Guaranteed Loan Program (details listed above), but additional programs are available for renewable energy projects, timber production, community facilities and water or waste disposal systems.

Many state and local governments offer financing options for small businesses. New York, for example, offers lending resources for small businesses through its Empire State Development Division and by backing private-sector community development financial institutions (CDFIs) and lenders.

You can browse government business loans by visiting your state’s Secretary of State or Department of Economic Development website. You can also try getting in touch with the National Association of Government Guaranteed Lenders (NAGGL) closest to you. For instance, the North Texas branch has a list of member organizations and their contact information on its website.

How to qualify for a business loan from the government

Each government business loan program has its own requirements — and you’ll also need to meet your lender’s individual criteria.

For SBA loans, for example, you’ll usually need to:

✅ Be a for-profit business operating in the U.S.

✅ Be 100% owned by U.S. citizens, U.S. nationals or unconditional lawful permanent residents (LPRs).

✅ Be a small business, as defined by the SBA.

✅ Be able to show your creditworthiness and ability to repay the loan.

✅ Sought out other forms of financing before turning to an SBA loan.

✅ Be able to demonstrate the need for a loan and show the business purpose for which you’ll use the funds.

✅ Cannot be delinquent on any existing government loans.

✅ Provide collateral, as required.

✅ Sign an SBA loan personal guarantee.

Lenders will also have their own qualifications, such as:

• A good personal credit score (690 and above).

• Solid annual revenue.

• At least two years in business.

» MORE: Read our full breakdown of SBA loan requirements

How to get a government business loan

Follow these general steps to get a business loan from the government:

1. Choose the right loan type

The right government business loan for you will depend on a variety of factors, such as why you need funding, your location and your qualifications. If you’re an established business looking for working capital, for example, an SBA 7(a) loan may be the best choice. Newer businesses, on the other hand, might consider an SBA microloan.

2. Determine how much you can afford to borrow

Consider the total cost of a small-business loan and make sure it meets your goals and budget. Use an SBA loan calculator to help you estimate payments and interest costs.

3. Evaluate your qualifications

Check the requirements of your government loan program — and make sure you can meet them. Also consider how you stand up to common business loan requirements, such as personal credit score, time in business and annual revenue.

4. Research and compare lenders

Unless you’re applying for an SBA disaster loan, you’ll be getting funding from a third-party lender, like a bank or credit union. If you already have an existing relationship with a financial institution (say, the bank that administers your business bank account), you might see if that lender offers SBA or USDA loans.

To find other potential lenders, use the Lender Match tool on the SBA website. The SBA also maintains a list of current microloan lenders. For USDA business loans, you can contact your local office to find participating lenders.

As you compare your options, look for lenders that offer competitive interest rates and loan terms. The best lenders have an established history issuing government business loans with a streamlined application process and dedicated loan specialists. You can also read online reviews to get a sense of what it’s like to work with a particular lender.

» MORE: Explore the best SBA lenders

5. Gather your documentation and apply

Preparing your paperwork can help speed up the application process. Government business loans often require extensive documentation, including:

• Business financial statements, such as balance sheets, profit and loss statements and cash flow projections.

• Business and personal tax returns.

• Business and personal bank statements.

• Existing debt schedule, if applicable.

• Detailed listing of all collateral.

• Business certificates or licenses.

• Loan application history.

• Resumes for each business owner.

• Business overview and history.

• Business lease.

Your lender should be able to answer any questions you have about the application process and what’s required.

6. Wait for approval and sign loan agreement

Government business loans typically take longer to fund than other types of financing. It may take anywhere from 30 to 90 days to get an SBA loan, for instance.

Once you receive approval, your lender will send you a business loan agreement. Read over the contract thoroughly and follow up with your lender if you have any questions or concerns. It can also be helpful to have a business attorney or other advisor look over the agreement as well.

Alternatives to government business loans

A government business loan might not be the right fit for every business or financial situation. Here are some alternative options to consider: