Key takeaways
- Because the government guarantees them, SBA loans offer low rates and long terms. They’re generally the most affordable business financing option after bank loans.
- You apply through a participating lender, not the SBA, and approval requires strong credentials (650+ credit score, two years in business, $100,000+ annual revenue) and thorough documentation.
- Loan amounts are available up to $5 million for uses like working capital, expansion or real estate, but funding can take weeks or months.
SBA loans are business loans partially guaranteed by the U.S. Small Business Administration and issued by participating lenders, usually banks. Their flexible terms and low rates make them the best option for businesses that can’t qualify for traditional bank financing, but still meet strong qualification requirements.
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What is an SBA loan?
An SBA loan is a small-business loan that can help cover startup costs, working capital needs, expansions, real estate purchases and more. This type of financing is issued by a private lender and backed by the federal government, specifically the Small Business Administration.
More than $16 billion in SBA 7(a) lending has been approved in the 2026 fiscal year so far (which started on Oct. 1, 2025).
How do SBA loans work?
Apply through a lender. You apply for an SBA loan through a lending institution like a bank or credit union.
Lender requests SBA guarantee. That lender then applies to the SBA for a loan guarantee, which means if you default on an SBA loan, the government pays the lender the guaranteed amount.
Provide a personal guarantee. The SBA requires an unconditional personal guarantee from anyone with at least 20% ownership in a company. This guarantee makes you personally responsible for repayment if your business cannot make the payments. Both the government guarantee and the personal guarantee reduce the risk for lenders, making them more willing to work with small businesses.
Loan is approved and funded. Once you’re approved for an SBA loan, your lender is responsible for closing the loan and disbursing the funds.
Repay the loan. You repay the lender directly, usually on a monthly basis.
Types of SBA loans
There are several government small-business loan options available, each with its own terms and conditions. The best SBA loan for you depends on how you plan to use the funds, your qualifications and how quickly you need financing.
Here’s a summary of the most common types of SBA loans.
| Program | Loan size | Purpose | Who it’s for |
|---|---|---|---|
| Up to $5 million. | Working capital, expansion and equipment purchases. | Established businesses that want funding for a wide range of needs. | |
| Up to $500,000. | Fast funding for working capital, expansion and real estate and equipment purchases. | Established businesses that need faster access to capital. | |
| Up to $5 million (up to $5.5 million for select projects). | Purchase long-term, fixed assets like land, machinery and facilities. | Businesses making large fixed asset purchases or investments that they want to pay off over time. | |
| Up to $50,000. | Working capital, inventory, supplies, equipment and machinery. | Startups and borrowers with bad credit who need small amounts of funding and can’t qualify for other SBA loan programs. | |
| Up to $2 million. | Repair physical damage and cover operating expenses. | Businesses who were affected by a declared natural disaster. | |
| Up to $5 million. | Flexible working capital line of credit to support a wide variety of small-business needs. | Growing businesses that need ongoing, flexible access to working capital. | |
| Up to $5 million. | Working capital for manufacturing businesses. | Small manufacturers (under 500 to 1,500 employees depending on your NAICS code) that need working capital to manage production cycles and supply chains. | |
| SBA Export Working Capital loans | Up to $5 million. | Working capital to support export sales. | Export businesses that need funding to fulfill international orders. |
| SBA Export Express loans | Up to $500,000. | Expedited funding to enhance a business’s export development. | Businesses looking to expand their export operations and needing faster access to financing. |
| SBA International Trade loans | Up to $5 million. | Long-term funding to expand export sales or modernize to contend with foreign competitors. | Businesses investing in longer-term export growth in order to compete in international markets. |
The SBA also offers lines of credit, real estate loans and business acquisition loans.
» MORE: Can you have multiple SBA loans?
Pros of SBA loans
Competitive rates
Per federal rules, participating lenders base SBA loan interest rates on the prime rate plus a markup, known as the spread. Rates can be fixed or variable. According to the SBA, roughly 80% of 7(a) loans have variable rates and only 20% have fixed.
The annual percentage rate (APR) on a loan is different from the interest rate. The APR is a percentage that includes all loan fees in addition to the interest rate.
APRs can vary widely between SBA- and non-SBA lenders. For example, an online SBA lender may cap its variable APR at around 13.25%, whereas non-SBA online lenders may offer APRs as high as 99%. This is why SBA loans are often the most affordable option if you don’t qualify for a traditional bank loan.
You can use NerdWallet’s SBA loan calculator to estimate your monthly payments and find out how much you’ll spend on interest based on different rates.
Low fees
Fees for SBA loans typically include:
- An upfront guarantee fee, based on the loan amount and maturity.
- A yearly service fee, based on the guaranteed portion of the outstanding balance (lenders may charge this only on 504 loans, not 7(a) loans).
For fiscal year 2026, which started on Oct. 1, 2025, 7(a) loans will have a guarantee fee ranging from 0.25% to 3.75%, based on the loan amount and term. For 7(a) loans to manufacturers (North American Industry Classification System sectors 31 to 33) of $950,000 or less, the guarantee fee is 0%. The SBA is also waiving the guarantee fee on all 504 loans (for fiscal year 2026) for these manufacturers.
The SBA reassesses its fee structure each year.
There are no upfront guarantee fees on SBA Express loans for veteran-owned businesses.
Longer terms
SBA loans have long term lengths, which means lower monthly payments. Lower payments mean you’ll have more money available for other business needs. The loan term you receive depends on how you plan to use the money. The current maximum maturities are:
- Working capital or inventory loan: 10 years.
- Equipment: 10 years.
- Real estate: 25 years.
Large loan amounts
Although the amount of funding you receive will vary based on the type of SBA loan and your business’s qualifications, SBA loans generally offer large loan maximums.
7(a) loans, for example, offer a maximum loan amount of $5 million. The 504 loan program also offers up to $5 million, or up to $5.5 million for small manufacturers and eligible energy-related public policy projects.
These are much larger loan amounts than typically offered by online lenders or even banks, which generally max out at $500,000 and $1 million, respectively.
Keep in mind: Although SBA loans are available in large amounts, the majority of borrowers receive loans of $350,000 or less. The average SBA loan amount funded through Fundera by NerdWallet, for example, is $157,603.
U.S. Small Business Administration SBA 7(a) loan
Min Credit
650 Cons of SBA loans
Hard to qualify
Although SBA loans are easier to qualify for than traditional bank loans, they still require good credit, strong finances and an established business history. This tends to make them out of reach for newer businesses or borrowers with bad credit.
Although exact requirements vary by lender, as a guideline, you’ll need:
- Personal credit score of 650+.
- Two years in business.
- $100,000 in annual revenue.
Slow to fund
Depending on your lender and the type of SBA loan you apply for, it can take one to three months to receive funds. Plus, the SBA loan application process is detailed and requires extensive documentation.
❗If you need capital quickly, you’ll need to consider online lenders — but expect higher costs.
Require some form of collateral
SBA loans tend to require an unlimited personal guarantee from anyone who owns 20% or more of the business. Lenders may ask that other business owners provide a limited or unlimited personal guarantee as well.
Depending on the loan and your business’s qualifications, you may also need to put up physical collateral to secure the loan or offer a down payment. SBA 504 loans, for example, require a down payment of 10% or more.
» MORE: Best secured business loans
What is required to qualify for an SBA loan?
SBA loan requirements vary based on the lender and the particular loan program, but you’ll often need several years in business and a good credit history to qualify. Additional criteria from the SBA include:
- You must be a for-profit business operating in the U.S.
- Your business must be 100% owned by U.S. citizens or U.S. nationals.
- The business owner must have invested equity, such as their own time and money, into the business.
- You must be able to demonstrate a need for financing and show the business purpose for which you’ll use the funds.
- You must be able to show your creditworthiness — i.e. your business has the means to repay the loan.
- You must meet the SBA’s definition of a small business.
- You must have tried to get financing from non-government sources before turning to an SBA loan.
🤓 Nerdy Tip
If you have a new business or have a rocky personal credit history, an SBA microloan is your best SBA loan option. These loans offer up to $50,000 in funding with competitive rates and terms. SBA microloans are designed for traditionally underserved businesses and, as a result, typically have more flexible qualification requirements.
How to get an SBA loan
1. Make sure your business is eligible
To qualify for an SBA loan, lenders typically like to see at least two years in business, strong annual revenue and a good credit score, which starts around 650. Ensure your business meets the SBA’s criteria for size, location and industry eligibility.
Also check that you don't fit into any of the categories that may automatically disqualify you from an SBA loan.
2. Choose a lender
The SBA offers a convenient Lender Match tool to match potential borrowers with lenders within two days.
If you’re applying through a traditional bank, look for one with experience processing SBA loans. Ask your potential lender these questions:
- How many SBA loans do you make?
- How often do you fund SBA loans?
- How experienced is your staff with SBA loans?
- What is the dollar range of the loans you make?
In general, a bank with multiple years of SBA experience will be able to better guide you, including letting you know your chances of being approved. Banks will follow SBA guidelines but use their own underwriting criteria to evaluate loan applications.
For example, Live Oak Bank, a digital-only bank, is the most active SBA 7(a) lender in the United States by lending volume so far in the 2026 fiscal year. Newtek Bank, another digital-only bank, is the most active 7(a) lender by number of approvals so far this fiscal year.
Both Live Oak and Newtek Bank are SBA Preferred Lenders. Preferred Lenders can make final credit decisions on loan applications without sending them to the SBA, expediting the underwriting process.
So far in fiscal year 2026, over 62% of 7(a) loans have been issued by Preferred Lenders.
» MORE: Best SBA lenders
3. Gather your documents
SBA loan applications can vary based on loan type, but your lender should be able to help you prepare your paperwork.
Here are some of the documents you’ll need:
- SBA’s borrower information form.
- Statement of personal history.
- Personal financial statement.
- Business financial statements.
- Personal income tax returns.
- Business tax returns.
- Business license.
- Loan application history.
- Resumes of business owners.
- Lease agreement, if applicable.
- One-year cash flow projection.
4. Submit your application and wait
It can take anywhere from 30 days to a couple of months to get approved for an SBA loan and receive funds. To get the fastest SBA loan possible:
- Work with an SBA Preferred Lender.
- Submit up-to-date and accurate documentation.
- Respond quickly to lender questions and requests.
If you’re short on time and need $500,000 or less, consider the SBA Express loan, which tends to fund faster than other options.
🤓 Nerdy Tip
The average turnaround time for an SBA 7(a) loan through Fundera by NerdWallet is about four weeks. Get personalized advice and assistance from our lending experts by submitting an application here.
Learn more about getting an SBA loan:
- Here’s how to get an SBA startup loan or an SBA franchise loan.
- Learn about SBA loan collateral requirements.
- Find out how to get an SBA loan if you're self-employed.
- Learn how to transfer your SBA loan to another person.
Frequently asked questions
How hard is it to get an SBA loan?
SBA loans are easier to qualify for than business bank loans. Because they’re backed by the U.S. government, they’re less risky for banks than loans issued without a guarantee. But SBA loans are usually harder to get than online business loans, which may require less time in business and lend to borrowers with lower credit scores.
What does SBA mean?
SBA stands for Small Business Administration. It is a federal agency dedicated to helping small businesses in the U.S. It does so through counseling, access to government contracts and loans and other resources.
Do you have to pay back an SBA loan?
Yes, you have to pay back an SBA loan. But the loan term — the amount of time you have to repay your lender — is typically longer than other types of business loans.
How much money can you get from an SBA loan?
Funding maximums vary by SBA loan type. SBA 7(a) loans offer up to $5 million. 504 loans typically also provide up to $5 million (but may go up to $5.5 million for select projects). SBA Express loans are capped at $500,000, and SBA microloans provide up to $50,000.
Can an SBA loan be forgiven?
SBA loans are generally not eligible for forgiveness. The loan must be repaid according to the terms of your loan agreement. COVID-era Paycheck Protection Program loans were an exception. These loans were eligible for forgiveness.
Having trouble repaying your COVID SBA loan? Check out our guide here.
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- 1. U.S. Small Business Administration . 7(a) & 504 Lender Report. Accessed May 4, 2026.
- 2. U.S. Small Business Administration. 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026 and 90-Day Rule Clarification. Accessed May 4, 2026.
- 3. U.S. Small Business Administration. 504 Fees for Fiscal Year 2026 . Accessed May 4, 2026.
- 4. U.S. Small Business Administration. Terms, conditions, and eligibility. Accessed May 4, 2026.
- 5. U.S. Small Business Administration. 504 Loans. Accessed May 4, 2026.
- 6. NerdWallet. 2026 NerdWallet Business Loan Study. Accessed May 4, 2026.
- 7. U.S. Small Business Administration. 7(a) & 504 Lender Report. Accessed May 4, 2026.
