SBA 7(a) Loan: What It Is and How to Apply

An SBA 7(a) loan is a small-business loan issued by a private lender and partially backed by the U.S. Small Business Administration. SBA 7(a) loans are the most common type of SBA loan, and the SBA has guaranteed over 16,000 7(a) loans, totaling over $6.8 billion, so far in fiscal year 2025^[0]

Although SBA 7(a) loans can be hard to qualify for, they are an ideal option for business financing due to their long repayment terms and low interest rates. Plus, 7(a) loans can be used for a variety of purposes, including working capital, business expansions or purchasing equipment and supplies.

The SBA 7(a) loan program consists of several different loan types. The best one for your business will depend on the amount of funding you need, how you intend to use the funding and how quickly you need it.

Pilot loan programs: 7(a) Working Capital

The 7(a) Working Capital Pilot Program is designed to offer a flexible and affordable way for small businesses to meet their working capital needs. These lines of credit are available up to $5 million with terms up to 60 months.

Although you can get a working capital line of credit through the CAPLines program, this pilot program offers a more streamlined application process and a unique fee structure. The program also provides one-on-one counseling with SBA subject matter experts.

» MORE: What is a charge-off on an SBA loan?

The maximum term lengths for SBA 7(a) loans typically depend on the use of loan proceeds:

• 25 years for real estate.

• 10 years for equipment.

• 10 years for working capital or inventory loans.

There are some exceptions to this. For example, SBA CAPLines of credit have a maximum term length of 10 years, and the Builders line of credit cannot exceed a term of five years.

The SBA sets general guidelines for the 7(a) loan program that lenders must abide by, dictating maximum loan amounts, term lengths and interest rates; however, you'll receive the specifics of your SBA 7(a) loan from your participating lender.

SBA 7(a) loan interest rates are set based on the prime rate — a benchmark used by banks to dictate rates on consumer loan products, which changes based on actions by the Federal Reserve Board — plus a spread that is negotiated between you and your lender.

The spread may be fixed or variable, but it is subject to SBA maximums, which are determined by the size of your loan.

Here are the current maximum SBA 7(a) loan fixed rates:

Here are the current maximum SBA 7(a) loan variable rates:

These rates apply to all types of SBA 7(a) loans, with the exception of Export working capital program loans. Lenders determine the interest rates for EWCP loans and the SBA monitors them for "reasonableness."

It’s important to note that the interest rate is only one part of the overall cost of a 7(a) loan.

Although the SBA restricts the fees lenders can charge, most SBA 7(a) loans will have a guarantee fee, which (at a maximum) ranges from 0.25% to 3.75% based on the size of the loan.

The SBA waives guarantee fees on Express loans for veteran-owned businesses.

Depending on the lender, you may also face packaging and servicing fees — however, the SBA specifies that lenders cannot charge prepayment penalties, origination fees, renewal fees or similar extraneous fees. Lenders are allowed, however, to charge a flat fee of $2,500 per loan^[0]

» MORE: Use our SBA loan calculator to estimate your 7(a) loan payments

Regardless of the type of 7(a) loan, you'll have to meet a standard set of requirements laid out by the SBA, as well as any requirements from your lender in order to qualify for financing.

Typically, small businesses must meet the following criteria to qualify for an SBA 7(a) loan:

• Must be a for-profit business operating in the U.S. Certain types of businesses — such as real estate investment firms, religious organizations and gambling businesses — are not eligible.

• Must be a small business, as defined by the SBA.

• Must be able to show your creditworthiness and ability to repay the loan.

• Must have sought out other forms of financing before turning to an SBA loan.

• Must be able to demonstrate the need for a loan and show the business purpose for which you’ll use the funds.

• Cannot be delinquent on any existing government loans.

• Be able to provide collateral for loans larger than $50,000.

• Owners of 20% or more of the business must provide a personal guarantee.

Additionally, although the SBA doesn’t designate numerical minimums for evaluating a borrower’s creditworthiness and ability to repay a loan, lenders will typically want to see the following:

• A good personal credit score (690 and above).

• Solid annual revenue.

• At least two years in business.

» MORE: Can you have multiple SBA loans?

To apply for a 7(a) loan, you’ll work with an SBA lending partner, like a bank or credit union, to complete an application. The lender will submit your application package to the SBA in order to receive a loan guarantee; this way, if you default on the loan, the SBA will repay the lender the guaranteed amount.

If you think you might qualify for an SBA 7(a) loan, you can complete the application process by following these three steps:

1. Find an SBA 7(a) lender

Hundreds of financial institutions offer SBA 7(a) loans, including national banks like Chase, Wells Fargo and Bank of America. You might start by contacting a bank you have a relationship with to see if it offers SBA 7(a) loans.

The SBA also offers a lender match tool through its website that allows you to provide information about your business and get connected with a lender in your area.

In general, you’ll want to look for SBA lenders that have experience issuing 7(a) loans, as these institutions will be able to expedite the application process, answer questions you may have and possibly increase your chances for approval.

Resources:

• Best banks for small-business loans.

• NerdWallet’s best SBA lenders.

2. Gather your documents and submit your application

Your SBA lender will be able to help you gather your documents to prepare and submit a completed SBA 7(a) loan application. Although the requirements will vary based on the individual lender and the type of SBA 7(a) loan, here is some of the documentation you may need to provide:

• SBA Form 1919, Borrower Information Form.

• Personal background and financial statement (SBA Forms 912 and 413).

• Business financial statements, such as balance sheets, profit and loss statements and projected financial statements.

• Business certificate or license.

• Loan application history.

• Income tax returns.

• Resumes for each business owner.

• Business overview and history.

• Business lease.

3. Wait for approval and close on your loan

After you’ve submitted your SBA 7(a) loan application, you’ll need to wait for approval — whether from your lender directly or the SBA. SBA Express and Preferred Lenders may approve loans without the SBA reviewing the application, thereby expediting the timeline.

Once your loan is approved, your lender will start the closing process, which includes securing collateral, preparing loan documents and fulfilling any other authorization requirements.

Your lender will then disburse your funds, and you will repay the loan in monthly payments over the course of the term. The application and funding process usually takes between 60-90 days to get an SBA loan, though turnaround time varies.

» MORE: How to apply for an SBA loan