What is an SBA 7(a) Loan?
Learn what SBA 7(a) loans are, understand the terms, rates, and requirements, and see how this flagship SBA program compares to other financing options.
The SBA 7(a) loan is the Small Business Administration's flagship lending program and the most common type of SBA loan. It provides flexible funding up to $5 million for a wide range of business purposes, including working capital, equipment, real estate, business acquisition, and debt refinancing.
SBA 7(a) Loan Terms
Here are the key terms for SBA 7(a) loans:
| Feature | Details |
|---|---|
| Maximum loan amount | $5 million |
| Guarantee percentage | 75% for loans over $150,000; 85% for loans $150,000 or less |
| Working capital terms | Up to 10 years |
| Equipment terms | Up to 10 years or useful life |
| Real estate terms | Up to 25 years |
| Interest rates | Prime + 2.25% to 4.75% (varies by loan size and term) |
Eligible Uses
SBA 7(a) loans can be used for almost any legitimate business purpose:
- Working capital and operating expenses
- Purchasing equipment, machinery, or furniture
- Buying real estate or commercial property
- Acquiring an existing business
- Refinancing existing business debt
- Leasehold improvements and renovations
Qualification Requirements
To qualify for an SBA 7(a) loan, you typically need:
- Credit score of 680 or higher (some lenders require 700+)
- At least 2 years in business (startups may qualify with strong business plan)
- Demonstrated ability to repay from cash flow
- Personal guarantee from all owners with 20%+ stake
- Collateral for larger loans (though the SBA does not decline loans solely for lack of collateral)
- To meet SBA size standards for your industry
The Credit Elsewhere Test
SBA loans are intended for businesses that cannot get favorable terms from conventional lenders. You must demonstrate that you would not otherwise qualify for reasonable financing.
Interest Rates
SBA 7(a) interest rates are capped by the SBA based on the prime rate. As of February 2026, rates typically range from prime + 2.25% to prime + 4.75%, depending on loan amount and term length. Variable-rate loans adjust with prime; fixed-rate options are also available.
SBA 7(a) vs. SBA 504
The main difference is purpose: SBA 7(a) is flexible and can fund almost anything, while SBA 504 is specifically for major fixed assets (real estate and heavy equipment) and requires job creation commitments.
For most general business needs, SBA 7(a) is the right choice. For large real estate purchases, SBA 504 may offer better terms.
The SBA 7(a) application requires significant documentation. Start gathering tax returns, financial statements, and a business plan early to speed up the process.
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Read more →What is an SBA Express Loan?
Learn what SBA Express loans are, understand the faster approval timeline, and see how this program compares to standard SBA 7(a) loans.
Read more →What is an SBA Guarantee?
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
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Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.