Small Business Administration (SBA) 7(a) loans are the most common type of loan offered by the SBA. These are backed by the SBA and issued through participating lenders. Loan proceeds can be used for a variety of business purposes, including the purchase of equipment, inventory, real estate, and other working capital needs.
You can choose from different types of 7(a) loans. Typically, the maximum amount of funding is $5 million, with repayment terms of up to 25 years for real estate and 10 years for working capital. To qualify, you’ll need to meet requirements that apply to all SBA loans, eligibility criteria unique to the 7(a) loan program, and lender-specific items.
SBA loans can offer some of the most competitive rates in the market. However, getting a loan can involve a lot of paperwork and may take between one and three months to get funded. If you’re sure that an SBA loan is right for you, we recommend considering Clarify Capital. It is a broker with more than 75 lenders in its network, and you’ll be able to work with a dedicated advisor to walk you through the process.
How an SBA 7(a) Loan Works
You can choose from seven different types of loans in the SBA 7(a) loan program. Each has its own set of terms and qualification requirements, which we’ve summarized below. You can also learn more in our guide on the different types of SBA loans.
SBA 7(a) Loan Rates
SBA 7(a) loan rates will vary depending on the lender you choose, the terms you’re looking for, and the strength of your business qualifications. However, the SBA does set limits for how much lenders can charge.
Below are the maximum rates for both a fixed-rate and variable-rate SBA 7(a) loan. Since rates can fluctuate throughout the month, you can also view updated information in our guide on SBA loan rates.
SBA 7(a) Qualification Requirements
If you want to get an SBA 7(a) loan, you’ll need to meet certain requirements set by both the SBA and the lender you choose.
SBA 7(a) Loan Terms on Repayment
Most SBA 7(a) loan terms will allow a repayment length of up to 25 years for real estate, with working capital, machinery, and equipment terms of up to 10 years or the useful life of the equipment (not to exceed 15 years).
Certain types of 7(a) loans have different terms, and these exceptions are listed below:
- SBA Express: Up to 10 years on a revolving line of credit
- Export Express: Up to 7 years on a revolving line of credit
- Export working capital: Up to 12 months on a revolving line of credit
- CAPLines: Up to 10 years
SBA 7(a) Loan Fees
Just like the SBA sets maximums for interest rates, it also sets limits for the fees that lenders can charge for their SBA loans. Some fees can be included with your loan amount so that you won’t have to pay for it out of pocket. Fees can include the SBA guarantee, packaging, servicing, third-party, and prepayment fees.
SBA guarantee fee
SBA guarantee fees can range from 0% to 3.75% depending on the characteristics of your loan. Lenders issuing SBA loans know that in the event of default, a portion of the losses will be covered by the SBA. To cover the likelihood of this happening, the SBA charges lenders this guarantee fee that, in turn, passes on the cost to its borrowers.
SBA Guaranteed Amount
SBA Guarantee Fee for Loans Less Than 12 Months
SBA Guarantee Fee for Loans Greater Than 12 Months
Up to $500,000
75% of the loan amount (85% for loans up to $150,000)
$500,001 to $700,000
75% of the loan amount
0.25% of the guaranteed amount
0.55% of the guaranteed amount
$700,001 to $1,000,000
75% of the loan amount
0.25% of the guaranteed amount
1.05% of the guaranteed amount
$1,000,001 to $5,000,000
75% of the loan amount, with a maximum of $3.75 million
0.25% of the guaranteed amount
3.5% of the guaranteed amount up to $1 million, plus 3.75% of the guaranteed amount over $1 million
Lenders may charge a packaging fee of around $2,000 to $4,000. This is meant to cover the costs associated with compiling all of the documents needed for your loan application to be considered complete.
Extraordinary servicing fee
A servicing fee of up to 2% may apply depending on the complexity of your loan application or business circumstances. For example, this fee may apply if you are applying for a real estate loan for construction purposes that requires the lender to take extra steps to evaluate the project or value of the property.
This can include costs for outside services that are needed to complete your loan. Some examples can include title fees, appraisal fees, environmental report fees, attorney fees, and business valuation fees.
SBA 7(a) loans with a repayment term greater than 15 years are subject to a prepayment penalty. If you pay more than 25% of your loan, you can be charged a fee of up to 5% in the first year, 3% in the second year, and 1% in the third year.
Who Should Get an SBA 7(a) Loan?
The 7(a) loan is the most common loan program offered by the SBA and can be used for a number of business purposes. If you’re going to use the funds for any of the following, then this type of loan could be a good fit for you:
- Using it as working capital
- Purchasing equipment, machinery, fixtures, supplies, or materials
- Acquiring real estate, land, or buildings
- Financing improvements to an existing building
- Financing the costs associated with the construction of a new building
- Purchasing another business
- Establishing a new business
SBA 7(a) Loan Pros & Cons
|Provides low interest rates||Can take 45 to 90-plus days to fund|
|Offers loan proceeds with few restrictions on allowable business uses||Involves a significant amount of paperwork during the application process|
|Has large loan amounts of up to $5 million and long repayment terms of up to 25 years||Can be difficult for startup businesses to qualify|
How To Get an SBA 7(a) Loan
While getting an SBA loan may seem overwhelming, it can be simplified into four main steps. These steps include understanding what your loan options are, checking your eligibility, choosing an SBA 7(a) provider and, finally, submitting an application with the required documentation by the lender.
We’ve summarized each of these steps below—but you can also head over to our guide on how to apply for an SBA loan for more details.
There are seven main types of loans in the 7(a) program. Each has its own set of terms, including maximum loan amounts, repayment terms, and allowable uses. The funding speed can also vary. You should consider each of these items carefully to ensure you’re selecting the loan that will best meet your business needs.
The SBA 7(a) loan that gives you the terms you’re looking for won’t matter if you’re ineligible. However, being aware of what the qualification requirements are can give you an advantage when it comes to getting approved. If you know what lenders are looking for, you can present yourself better to not only get approved but also get approved more quickly.
Regardless of your eligibility, you’ll want to make sure you are comfortable with the minimum monthly payments. You can use our SBA 7(a) loan calculator to find out what your payments will be and how these could impact your business cash flow.
Be sure to review the general requirements that apply to all SBA loans, the items that are specific to the 7(a) loan you’re applying for, and any lender-specific items.
Lenders that offer SBA loans include credit unions, banks, online lenders, and brokers. If you’re unsure where to look for a lender, you can start with our recommendations of the best SBA lenders.
You can also use the SBA’s online tool, SBA Lender Match. It’s designed to provide you with a list of lenders that fit your criteria based on the type of funding you need.
Once you’ve picked a lender, you’ll need to submit a loan application and provide any requested documentation. SBA loans can involve a significant amount of paperwork and commonly includes the following:
- Tax returns
- Profit and loss statements
- Cash flow statements
- Balance sheets
- Business bank statements
- Business licenses and professional certifications
- Business plan (see our SBA business plan guide and template)
In addition to our guide on how to apply for an SBA loan, which is linked above, you can refer to our article on how to get a small business loan. It contains tips on what lenders look for when reviewing your loan application.
SBA 7(a) Loan vs Alternatives
Common alternatives to an SBA 7(a) loan include commercial real estate (CRE) loans, working capital loans, and the SBA 504 loan program. These may have more favorable loan terms that better suit your needs or offer more flexible qualification requirements. In the case of CRE loans, you could also get approved and funded more quickly.
Below, we have a quick comparison of how the SBA 7(a) program stacks up against these two alternatives. If you decide that a CRE loan might be a better fit for you, consider our recommendations for the best CRE loans.
SBA 7(a) Loan
SBA 504 Loan
Typical CRE Loan
Typical Working Capital Loan
Typical Interest Rates
6% to 6.5%
7% to 14%
7% to 80%-plus
Required Down Payment
0% to 20%
0% to 10%
Typical Repayment Term
Up to 10 years
Maximum Loan Amount
$5 million to $50 million-plus
Typical Credit Score Requirement
45 to 90 days
60 to 90 days
30 to 60 days
1 to 3 days
Many types of loans can be classified as a working capital loan. This includes a small business line of credit, merchant cash advance (MCA), and other term loans. You can head over to our guide to the best working capital loans to find the type of loan that has terms suited to your business needs.
Frequently Asked Questions (FAQs)
Loan proceeds from an SBA 7(a) loan—the most common loan program offered by the SBA—can be used for a variety of business purposes, including real estate, working capital, inventory, and equipment.
The difficulty of getting an SBA 7(a) loan can vary depending on the lender you choose. This is because many qualification requirements are not determined by the SBA but by individual lenders. This can include criteria such as credit scores, time in business, and revenue requirements.
It typically takes between 45 to 90 days to get an SBA 7(a) loan. This depends on the complexity of your loan application, your business circumstances, how quickly you respond to a lender’s request for additional documentation, and the volume of applications being handled by your lender.
Loan proceeds you receive from an SBA 7(a) loan can be used for a wide variety of business purposes. Examples include the acquisition of real estate, purchasing business equipment, and other working capital needs. Although it can take between 45 and 90 or more days to get approved and funded, SBA 7(a) loans can offer some of the most competitive rates available.