SBA 7(a) Loans: Flexible Financing for Small Businesses (U.S.)

SBA 7(a) loans are the Small Business Administration’s primary program for helping small businesses secure financing. These loans are versatile, government-backed, and available for a wide range of business needs, including real estate, equipment, working capital, and more.

Why Choose an SBA 7(a) Loan?

• Versatile Use: Real estate, equipment, working capital, business acquisition, and more.
• Competitive Rates: SBA sets maximum interest rates.
• Long Terms: Up to 25 years for real estate.
• Low Down Payment: As little as 10% down.
• Government Guarantee: SBA guarantees a portion of the loan.

Loan Highlights

• Eligible Uses: Real estate, equipment, working capital, business acquisition, refinancing, construction, and more.
• Loan Amount Range: Up to $5 million
• Interest Rate: Prime + up to 2.75% (varies by lender and loan size)
• Loan Term: Up to 25 years (real estate), 10 years (equipment), 7 years (working capital)
• Maximum LTV: Up to 75% for loans over $150,000
• Minimum DSCR: 1.25x
• Recourse: Typically full recourse; personal guarantees required
• Prepayment: Penalty applies for loans with maturities of 15+ years if prepaid in first 3 years

Advantages

• Wide Eligibility: May be available even if other financing isn’t.
• Flexible Terms: Suits many business needs.
• Low Down Payment: Retain more working capital.
• Assumable: Loans can be transferred to a new owner (with SBA approval).
• Government Guarantee: Encourages lenders to approve more loans.

Disadvantages

• Strict Requirements: Must meet SBA eligibility and credit standards.
• Personal Guarantee: Owners with 20%+ stake must guarantee.
• Prepayment Penalty: For early payoff on long-term loans.
• Approval Process: Can be lengthy and require documentation.
• Adjustable Rates: Most common 7(a) loans are variable rate.

Eligibility & Property Types

SBA 7(a) loans are available for:

• Office, industrial, retail, warehouse, medical, self-storage, hotel/motel, mixed-use, and more

Borrower requirements:

• For-profit U.S. business
• Meet SBA size standards
• Good credit and repayment ability
• Not engaged in ineligible activities (e.g., speculation, lending, gambling)

Frequently Asked Questions

What is an SBA 7(a) loan?

A government-backed loan for a wide range of business purposes, including real estate, equipment, and working capital.

What are the main benefits of SBA 7(a) loans?

Versatility, competitive rates, long terms, and government guarantee.

What are the downsides?

Strict requirements, personal guarantee, and prepayment penalties.

How much can I borrow?

Up to $5 million.

What can I finance with a 7(a) loan?

Real estate, equipment, working capital, business acquisition, and more.

Real Stories

“The SBA 7(a) loan helped us acquire a new location and expand our business. The process was detailed, but the support and terms were excellent.”
— Small Business Owner, Texas

Ready to Take the Next Step?

Glossary

• SBA 7(a) Loan: The SBA’s primary business loan program. Learn more
• Personal Guarantee: Owner’s promise to repay the loan. Learn more
• Prepayment Penalty: Fee for paying off a loan early. Learn more