SBA loans
SBA loan requirements: how 7(a), 504 and microloans work
The SBA mostly does not lend; it backs loans that approved lenders make. Up to $5 million on a 7(a), $5.5 million on a 504, $50,000 on a microloan, and what each can pay for.
An "SBA loan" is usually a loan from a bank, credit union or other lender that the Small Business Administration backs. The lender makes the credit decision and sets the terms; the SBA's backing lowers the lender's risk. The SBA says its guaranteed loans generally have rates and fees comparable to loans without the guarantee.
The three main programs
| Program | Up to | Made by | Good for |
|---|---|---|---|
| 7(a) | $5 million | SBA 7(a) lenders | General business purposes |
| 504 | $5.5 million | Certified Development Companies with a senior lender | Buildings, land and long-lived equipment |
| Microloan | $50,000 | Nonprofit intermediary lenders | Smaller needs: working capital, inventory, supplies, equipment |
7(a)
The maximum is $5 million. The SBA's eligibility list starts with three requirements: the business operates for profit, is small under SBA size standards, and cannot get the credit it wants on reasonable terms from non-government sources.
504
Long-term, fixed-rate financing, with a maximum of $5.5 million, for buying, building or renovating buildings or land, and for machinery and equipment with at least 10 years of useful life left. It cannot pay for working capital, inventory, or speculation or investment in rental real estate.
Microloans
Loans of $50,000 or less; the SBA says the average is about $13,000. The maximum term is seven years. A microloan cannot pay existing debts or buy real estate. The intermediary lender makes the credit decision and sets the terms, including any collateral it asks for.
What lenders look at
Each lender has its own standards, so check with the one you apply to. Expect:
- Credit. For a new business, the SBA notes, eligibility is typically based on the owner's personal credit score.
- A plan and projections. The SBA suggests a business plan, an expense sheet and five-year financial projections.
- Ability to repay. Cash flow that covers the new payment and the old ones. The debt service coverage calculator shows the ratio lenders use.
- A guarantee. Owners are commonly asked to guarantee the loan personally.
Finding a lender
The SBA's Lender Match prepares a summary of interested lenders two business days after you submit a request; you can also contact SBA lenders directly. Using it does not guarantee a match or a loan. If a lender turns you down, you can get the reasons.
Sources
- SBA: Loans sba.gov
- SBA: 7(a) loans sba.gov
- SBA: 504 loans sba.gov
- SBA: Microloans sba.gov
- SBA: Lender Match connects you with lenders sba.gov
- SBA: Size standards sba.gov
- SBA: Fund your business sba.gov
How this page was made
Drafted with a language model from the sources above. Jake Lawrence read it against those sources and signed it on October 25, 2026. General information, not legal, tax or financial advice: nothing here answers one business's situation, and every lender and supplier sets its own terms. Found an error? See Corrections.