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Because small businesses are so critical to the country’s success, the federal government launched the Small Business Administration (SBA) to help foster American small businesses.
The most popular way the SBA furthers its mission is through SBA 7(a) loans—if your business qualifies, you can get funding backed by the government that can help take your enterprise to the next level.
What is an SBA 7(a) loan?
An SBA 7(a) loan is a form of financing that is partially guaranteed by the U.S. Small Business Administration. These loans are named after Article 7(a) of the Small Business Act of 1953, which launched the SBA and tasked the agency with supporting American small businesses through lending.
SBA 7(a) loans are popular for financing real estate purchases, working capital, and purchasing furniture and supplies. They’re also commonly sought for refinancing existing business debt.
Are all SBA loans 7(a) loans?
SBA 7(a) loans are the most popular type of loans offered by the SBA, so many people refer to them as “SBA loans”. Keep in mind that 7(a) loans are a specific loan program offered by the SBA, and there are several types of 7(a) loans. In addition, the SBA offers other types of loan programs, such as the 504 loan program, that don’t fall under this umbrella.
Looking for information on all SBA loans, not just 7(a) loans? Check out our guide to SBA loans here.
What can an SBA 7(a) loan be used for?
Proceeds from a 7(a) loan may be used for:
- Working capital
- Equipment purchases and or/ installation
- Acquiring, refinancing, or making improvements to Real estate
- New-building construction
- Renovation or expansion
- Starting a new business
- Purchasing an existing business
- Refinancing current business debt
- Purchasing furniture, fixtures and supplies
- Multiple purpose loans
- Changes of ownership
Loan proceeds may not be used to:
- Pay off an existing business loan
- Buy out a partner
- Pay delinquent state or federal withholding taxes
- Anything else that wouldn’t be considered a sound business purpose as determined by the SBA
Types of SBA 7(a) loans
The SBA has a suite of different financing products under its 7(a) distinction, and each one is meant to fill a different need in the small business ecosystem.
When considering your options, think about how large of a loan your business needs, your intended use of the funds, and how quickly you need the money.
SBA loans require a fair amount of information and paperwork, so researching 7(a) loan types will save you time later.
Standard 7(a) loan
The standard 7(a) loan is the most common and most popular type of 7(a) loan backed by the SBA. The purpose of these loans is to allow small businesses to expand by funding working capital or the purchase of equipment, supplies, and real estate.
A standard 7(a) loan is available in amounts of $350,000 to $5 million. The maximum SBA guarantee is 85% for loans up to $150,000 and 75% for loans greater than $150,000. The SBA requires lenders to collateralize all standard 7(a) loans.
For standard 7(a) loans, while it is the lender's responsibility to perform credit analysis, loan structure and verify that the applicant meets SBA eligibility requirements, the SBA makes the final approval decision before providing a loan number.
7(a) small loan
The 7(a) small loan is similar in many ways to the standard 7(a) loans, but it’s meant for businesses that need smaller amounts of funding to get off the ground or expand.
The maximum loan amount is $350,000. Their turnaround time and eligibility decision process are the same as standard 7(a) loans. The SBA guarantees 85% of loans up to $150,000 and 75% of loans over that amount. Collateral is not required for loans under $50,000. The lender follows its collateral policy for loans greater than $50,000.
Applicants can usually expect a decision in two to 10 business days.
SBA Express loan
The SBA express loan is built for speed—sometimes, entrepreneurs need funding ASAP.
The maximum amount for an express loan is $500,000, and an application will be responded to in 36 hours or less. These loans are 50% guaranteed by the SBA. Only lenders with SBA Express authority can issue these loans, and the lender makes all eligibility, collateral, and credit decisions under delegated authority.
7(a) Export Trade Finance
The SBA has 3 core 7(a) international trade finance programs geared towards helping small businesses be competitive in export markets.
Export express loan
The export express loan was specifically created as a streamlined option for businesses in the export industry or those looking to develop an export operation. It has many similar features to an SBA Express loan, but provides a higher guarantee to mitigate international credit risk.
The loans, with a maximum amount of $500,000, have a breakneck turnaround time of just 24 hours or less. Similar to SBA Express, lLenders make all eligibility and collateral decisions through delegated authority. The SBA guarantee is 90% for loans of $350,000 or less and 75% for larger loans. This funding can take the form of a term loan, or a revolving line of credit that can last up to seven years.
Export working capital loan
Also tailored for exporters, the export working capital loan is meant to fund working capital for businesses that generate export sales.
These loans can range up to $5 million, and the SBA guarantee is 90%. Eligibility decisions are made by the SBA or lenders who have delegated EWCP authority. Unlike other 7(a) loans, there is no maximum interest limit imposed by the SBA for export working capital loans. The decision turnaround time is five to 10 business days.
Collateral is required, usually in the form of export inventory and personal guarantees from a business’ owners. This loan can take the form of a term loan, or a revolving line of credit for three years or less.
International trade loan
International trade loans are SBA 7(a) loans aimed at businesses that want to grow their export side or need to modernize their operation to handle foreign competition.
The maximum loan amount is $5 million, and the eligibility decisions, turnaround time, and SBA guarantee are the same as for export working capital loans. For international trade loans, the loan maturity is set at 10 years for permanent working capital.
Equipment and machinery, loans mature up to 10 years or at the useful life of the equipment (not to surpass 15 years). Real estate loans mature at 25 years.
7(a) CAPLines
CAPLines of credit are a form of a standard SBA 7(a) loan that works as a line of credit instead of a loan.
Remember, a business line of credit is a form of financing that allows businesses to access money as expenses arise, similar to a credit card. With a business loan, on the other hand, a full amount is disbursed upon approval, and repayments are made based on the approved amount.
The loan maximums, terms, and decision process of CAPLines of credit are the same as for standard 7(a) loans. The SBA offers four types of CAPLines:
Working Capital CAPLine
A line of credit for businesses that are unable to meet credit standards for other long-term financing, typically businesses that provide credit to other businesses, and in which repayment is based on assets.
To be eligible for a Working Capital CAPLine, your business must generate accounts receivable (not notes receivable), and/or have inventory.
Contract CAPLine
A line of credit aimed at financing businesses that work on a contract basis. Rather than permanent working capital, this specific type of working capital is meant to be used for working capital for one or more specific projects.
Builders CAPLine
A line of credit for small general contractors or builders that construct or renovate residential or commercial buildings. To be eligible for the Builders CAPline, you must be a construction contractor or a homebuilder with demonstrated experience in profitable construction or renovation.
Seasonal CAPLine
The Seasonal CAPLine is a line of credit meant for businesses that operate on a seasonal basis to help provide working capital for the busy season. To be eligible, your business must have been in operation for at least one year, and be able to demonstrate a pattern of seasonal activity. You can’t use this working capital to weather downturn or slow seasons, and must use it to finance increases in accounts receivable, inventory, and associated labor costs.
7(a) Working Capital Pilot (WCP) Program
Launched on August 1, the WCP pilot program offers monitored lines of credit to businesses through the SBA 7(a) loan program.
Through the pilot program, eligible businesses can receive a line of credit up to $5 million. In order to qualify, businesses must operate in industries like manufacturing, wholesale, or professional services and have at least one year of operating history.
Businesses applying must be able to provide financial statements, accounts receivable, and accounts payable, as well as regular inventory reports.
The loan guarantee is the same as regular SBA (7a) loans.
Eligibility requirements for SBA 7(a) loans
Most U.S. small businesses can qualify for an SBA 7(a) loan, but there are a few exceptions such as nonprofits and certain restricted membership organizations. The SBA also requires that business owners meet basic criteria around location, profit status, size, citizenship and access to other financing.
For a full breakdown of eligibility rules - including disqualifiers, credit considerations, and ineligible businesses, read our guide to SBA loan eligibility requirements.
SBA 7(a) loan terms
SBA loans are meant to support long-term small business growth.
Loan maturity terms, as a result, are based on the ability to repay, the purpose of the loan, and the life of assets financed by the loan. Loan maturity refers to how long it takes for a borrower to repay the loan. At the end of your loan maturity term, you’ll make the final repayment.
The maximum maturities for SBA 7(a) loans are as follows.
- The maximum maturity for real estate is 25 years.
- The maximum maturity for equipment is 10 years.
- The maximum maturity for working capital or inventory is 10 years.
SBA 7(a) loans used to buy fixed assets, like real estate or equipment, carry a maturity limited to the economic life of those assets, not to exceed 25 years. Fixed assets, which also include commercial property or furniture, are assets meant for long-term use that cannot be quickly converted to cash.
SBA 7(a) loan rates
With SBA 7(a) loans, the interest rate is set by the lender. In most cases, the lender will determine a rate based on creditworthiness, loan amount and repayment terms, and the applicant either accepts or rejects that rate. In many cases, you might be able to further negotiate the rate with your lender.
Current SBA loan interest rates are tied to the prime rate, which can be fixed or variable. As of May 1, 2025, the prime rate is 7.5%. The SBA allows lenders to add a markup, but caps how high the rate can go.
Want to see exact SBA rate ranges for the current month, caps, and how your rate is calculated?
See our guide to SBA Loan Interest Rates for current figures and the full breakdown.
SBA 7(a) fees
Along with interest rates, you should expect to pay a guarantee fee to the lender for SBA 7(a) loans. This fee will be based on the size of the loan and the type of 7(a) loan you apply for. Guarantee fees for 7(a) loans for fiscal year 2025 range between 2% and 3.5%.
For a full table and breakdown of guarantee fees on 7(a) loans, read our guide to SBA guarantee fees.
Notably, the SBA expressly prohibits lenders from charging most other fees, including processing, origination, application, renewal, and brokerage fees.
Lenders are, however, allowed to charge a flat fee of $2,500 per loan.
Curious what you might pay on an SBA 7(a) loan? Use our SBA Loan Calculator to estimate your payments!
How to apply for an SBA 7(a) loan
While hundreds of different lenders offer 7(a) loans, the process is fairly standardized by the SBA.
The SBA 7(a) loan application process involves three main steps: choosing the right loan, gathering financial documents, and submitting your application to a qualified lender. Depending on the loan type, approval timelines can range from a few days to several weeks.
For a detailed checklist of required documents, step-by-step guidance, and tips to speed up the process, explore “How to Apply for an SBA Loan: Complete Steps and Requirements.”
Alternatives to SBA 7(a) loans
The requirements for SBA 7(a) Loans can be stringent. Maybe you feel it isn’t right for your business at this time! Here are some potential alternatives to SBA 7(a) loans to explore:
- SBA Microloans- These loans are smaller, and geared to newer businesses, but come with less strict borrower requirements.
- SBA Express Loan - These loans don’t require SBA review, which means you could work with a lender who can provide you funds you need quickly, with slightly less requirements than an SBA 7(a) loan.
- Lendio - While you can apply for an SBA loan with Lendio’s quick application, we can also connect you with online lenders to offer other flexible financing options that work for your business.
Ready to apply for an SBA 7(a) loan?
Apply for an SBA loan with Lendio’s quick application. We’ll connect you with the right lender for your situation, and can, on average, get you funded with a 7(a) small loan in less than 30 days.
