SBA loans are business loans made by approved lenders and partly backed by the U.S. Small Business Administration. That backing lowers the lender's risk, which helps small businesses get longer terms and larger amounts than they might otherwise qualify for. The trade-off is more paperwork and a longer wait.
Does the SBA lend the money directly?
Usually not. Approved lenders make the loan, and the SBA sets the guidelines and guarantees part of it. The SBA lends directly mainly to businesses and homeowners recovering from a declared disaster.
What are the main types of SBA loans?
| Program | What it's for | Size |
|---|---|---|
| 7(a) | The SBA's main program: working capital, equipment, real estate, refinancing business debt, or buying a business | Up to $5 million |
| 504 | Long-term, fixed-rate financing for major assets like real estate and equipment, through Certified Development Companies | Large, long-term projects |
| Microloans | Smaller loans through nonprofit intermediary lenders | $50,000 or less |
Across its programs, the SBA says its guaranteed loans range from $500 to $5.5 million.
What can you use an SBA 7(a) loan for?
- Buying, refinancing or improving real estate and buildings
- Short- and long-term working capital
- Paying off existing business debt
- Buying and installing machinery and equipment
- Furniture, fixtures and supplies
- Buying all or part of a business
- A mix of the above
Who qualifies for an SBA loan?
According to the SBA, a business generally needs to:
- Be a for-profit business that's officially registered and operating legally
- Do business in the U.S. or its territories
- Be creditworthy and able to repay
- Meet the SBA's size standards for a small business
- Have a sound business purpose
- Be unable to get the loan on reasonable terms from non-government sources
Lenders also look at your credit, cash flow, time in business and collateral.
How long does it take to get an SBA loan?
Longer than most other funding. SBA loans involve more documents and review, and the timeline depends on the program, the lender and how complete your application is. If you need money quickly, a merchant cash advance or line of credit may bridge the gap, though they usually cost more.
What documents do you need?
In our experience, many owners don't know what to have ready, and that's what slows them down most. Expect to gather:
- Business and personal tax returns
- Recent business bank statements
- Financial statements, such as a profit and loss statement and balance sheet
- A business plan or explanation of how you'll use the money
- Business licenses, registrations and ownership information
- Details on any collateral, such as property or equipment
Frequently asked questions
Who actually lends the money for an SBA loan?
Approved lenders, not the SBA. The SBA sets guidelines and guarantees part of the loan, which reduces the lender's risk.
How much can you borrow with an SBA loan?
SBA 7(a) loans go up to $5 million, microloans are $50,000 or less, and across its programs the SBA says its guaranteed loans range from $500 to $5.5 million.
What's the difference between a 7(a) and a 504 loan?
7(a) is the SBA's main, flexible program for many purposes, including working capital, equipment and real estate. 504 loans provide long-term, fixed-rate financing for major assets like real estate and equipment through Certified Development Companies.
Why do SBA loans take longer than other funding?
They involve more documents and review than options like merchant cash advances. Having your paperwork ready is the best way to keep things moving.
Does BRIDGEVANTI charge a fee to help with an SBA loan?
No. BRIDGEVANTI doesn't charge any fees for funding. We connect you with funding partners and may be compensated by them for referrals.