SBA 7(a) Loan Amounts, Terms, and Rates | SBA 7(a) Loans (2024)

FAQs

SBA 7(a) Loan Amounts, Terms, and Rates | SBA 7(a) Loans? ›

Interest rate: Rates may be fixed or variable, generally capped at prime +2.75 percent (for loans less than $50,000, higher rates may apply). Terms: Loan terms vary according to the purpose of the loan, generally up to 25 years for real estate or 10 years for other fixed assets and working capital.

Interest rate: Rates may be fixed or variable, generally capped at prime +2.75 percent (for loans less than $50,000, higher rates may apply). Terms: Loan terms vary according to the purpose of the loan, generally up to 25 years for real estate or 10 years for other fixed assets and working capital.

Loan amounts

Most 7(a) loans have a maximum loan amount of $5 million. However, 7(a) loans made under the SBA Express and Export Express delivery methods have maximum loan amounts of $500,000. SBA's maximum exposure (i.e., dollars guaranteed) is $3.75 million.

It can be difficult to get an SBA 7(a) loan if you don't have strong annual revenue, a good credit score (690+) and at least two years in business. SBA 7(a) loan requirements vary from lender to lender, but you'll generally need to meet these criteria to qualify.

Stay on top of SBA 7(a) loan interest rates to take advantage of affordable financing for your small business. As of April 2024, the interest rate for loans with a maturity of less than 7 years is the 12.75%. The interest rate for loans with a maturity of more than 7 years is 13.25%.

The SBA generally doesn't offer 100 percent forgiveness on 7(a) and 504 loans, no matter how dire your finances are. However, for companies that have had to cease operations, the SBA will consider settlements that have been agreed to between a borrower and their loan issuer.

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

7(a) Small loans exclude: Standard 7(a) loans, SBA Express, Export Express, CAPLines, Export Working Capital Program (EWCP), and Pilot Program loans. For loans $50,000 or less: SBA does not require collateral, except for International Trade loans, which have different requirements.

Why is it so hard to get an SBA loan? ›

The business owners personal credit history and personal credit score are very important in the businesses credit worthiness in the eyes of the SBA. It's important to have excellent credit history and a good personal credit score, with a standard minimum credit score of at least 680 to have the best chance of approval.

Failing to meet a lender's eligibility requirements for a business loan can result in denial. All lenders have specific criteria related to credit scores, annual revenue, time in business and other factors. What to do: It's important to review the eligibility requirements of potential lenders before applying.

You're not alone if you applied for an SBA loan and were denied. Most small businesses struggle to qualify, with over 50% of applicants being rejected. You can take concrete steps to improve your application, whether applying for the first time, trying to appeal a denial, or reapplying for a loan.

On average, most SBA loans take 30 to 90 days from applying to funding. 7(a) loan subtypes are backed directly by the SBA. The SBA's turnaround time is 2 to 10 business days, but approval from your chosen lender can take 30 to 60 days. Microloans are loans for smaller amounts of $50,000 or less.

An SBA 7(a) loan can take time to move through approval — typically, 60-90 days. In addition, if your lender is an SBA Preferred lender, they will have the authority to approve your loan much faster than a non-preferred lender.

Once the loan is approved and the agreement is signed, you may have to wait to receive the funds. Each lender takes a different amount of time to disburse loan funds. Funding could take anywhere from seven to 90 days. In most cases, once the SBA approves a loan, a business will receive funds within seven to 14 days.

How long does it take an SBA 7a loan to close? Contrary to some common misconceptions, most SBA loans do NOT take longer than conventional bank deals. At least not with the Preferred lenders that Speritas Capital works with. You can expect to close within 30-60 days of receiving a proposal from the lender.

SBA 7a loans can be used to buy a business or obtain working capital. The maximum loan for an SBA 7a loan amount is $5 million. The interest rate on a 7a loan, however, can be adjustable and tied to the prime interest rate. Collateral is required, at 90 percent.