SBA loans offer government-backed financing with competitive rates and flexible terms for small businesses. This article explains the 7(a), 504, and microloan programs, eligibility requirements, and application processes.

Small Business Administration loans provide accessible, affordable financing to small businesses through government guarantees that reduce lender risk. The SBA does not lend directly; instead, it partners with banks, credit unions, and specialized lenders to guarantee a portion of loans, enabling businesses that may not qualify for conventional financing to access capital. SBA loans offer longer repayment terms, lower down payments, and competitive interest rates compared to many traditional loans, making them attractive for startups, expansions, equipment purchases, and working capital needs.

The 7(a) loan program is the SBA's most popular and versatile option, supporting a wide range of business purposes including working capital, inventory, equipment, real estate, and debt refinancing. Loan amounts reach up to $5 million, with the SBA guaranteeing up to 85 percent of loans under $150,000 and 75 percent of larger loans. Terms extend up to 10 years for working capital and equipment, and up to 25 years for real estate. Interest rates are capped and typically lower than conventional business loans. The SBA Express program offers expedited approval for loans up to $500,000, while specialized programs support exporters, rural businesses, and community development initiatives.

The 504 loan program finances major fixed assets such as real estate, buildings, and large equipment through partnerships between certified development companies, banks, and the SBA. Loans are structured with three components: 10 percent borrower equity, 50 percent from a private lender, and 40 percent from a CDC backed by SBA guarantees. Terms reach up to 20 or 25 years with fixed interest rates, and the structure provides low down payments and preserves working capital. The program suits established businesses making significant capital investments that support job creation and economic development.

SBA microloans provide up to $50,000 through nonprofit intermediaries to startups and small businesses needing smaller amounts for working capital, inventory, supplies, equipment, or furniture. Average loan sizes are around $13,000, with terms up to six years and competitive rates. Microloans often include technical assistance and mentoring, making them ideal for underserved entrepreneurs, women-owned and minority-owned businesses, and startups with limited credit history. Eligibility for SBA loans requires businesses to operate for profit in the U.S., meet size standards, demonstrate repayment ability, and have reasonable owner equity invested. Working with SBA-approved lenders and preparing thorough business plans, financial statements, and projections increases approval odds and accelerates funding.