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SBA loans are a popular financing option for small businesses, offering affordable interest rates and flexible terms for entrepreneurs looking to start or expand their business.
However, like any loan, there are limits on how much money you can borrow through the SBA program. Let's dive into the details of maximum SBA loan amounts and what they mean for small business owners.
Understanding maximum SBA loan amounts.
The maximum SBA loan amount refers to the highest sum a borrower can receive through a specific SBA loan program. These limits are in place to ensure that the loans are used for their intended purpose—to help small businesses grow and succeed.
The SBA sets different maximum loan amounts for its loan programs, including the 7(a), 504, and microloan programs. Each of these programs is designed to meet unique funding needs of small businesses, and limits will vary based on each loan program's requirements. , which we'll explore in more detail below.
Why are loan limits important?
While it would be great to receive limitless financing when you apply for a loan, loan limits help small businesses achieve a balance between being underfinanced, so they can’t grow and expand their business, and over-financed with debts that exceed their ability to pay.
Loan limits, especially those set by the U.S. Small Business Administration, help you make informed decisions and maximize financing without harming your business in the long run.
Now that you understand more about what SBA loan limits are, let's take a look at the unique loan limits for each SBA loan program.
Maximum SBA (7a) loan amounts.
The most popular SBA loan program is the 7(a) loan program, which provides working capital for small businesses. Each loan type under the SBA 7(a) loan program umbrella has different maximum amounts. They are listed in the chart below, along with the maximum amount of the loan the SBA guarantees.
Small Business Administration (SBA) loans are a popular financing option for small businesses. These loans offer affordable interest rates and flexible terms, making them an attractive choice for entrepreneurs looking to start or expand their business. However, like any loan, there are limits on how much money you can borrow through the SBA program.
Let's dive into the details of maximum SBA loan amounts and what they mean for small business owners.
Maximum SBA 504 loan amount.
The SBA 504 loan program is specifically designed to support small businesses in acquiring major fixed assets, such as real estate or equipment. Because the 504 loan is structured differently than 7(a) loan programs, the limit for the loan amount is not intended to cover all project costs.
With 504 loans, there are three parties to the loan structure. Usually:
- 50% bank/lender financing
- 40% CDC/ SBA-backed debenture
- 10% borrower contribution (this could be more depending on the project and some business characteristics).
With that in mind, here are the maximum loan limits the SBA will provide for 504 loans.
The minimum loan amount for a 504 loan is $25,000.
Maximum SBA microloan amount.
The SBA offers a microloan program designed specifically to aid small businesses and non-profit childcare centers in need of small-scale financing. This program caters to businesses that require smaller amounts of funding than offered under the larger SBA loan programs.
Microloans are distributed to borrowers through intermediary lenders, and the SBA microloan loan limit is $50,000. The average loan awarded tends to be around $13,000.
SBA Loan Limits by use case
If you’re interested in applying for an SBA loan for specific purposes, like buying a business or improving a commercial property, this chart can help you figure out which loan program you would use, and the applicable maximum SBA loan amount.
Keep in mind that most businesses will not qualify for a loan of the maximum amount, and you must meet SBA eligibility requirements for each of these uses of proceeds to qualify.
