SBA Loan Programs Compared: 7(a), 504, Express and Microloans
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Ten years in business banking before co-founding Lending Gurus. · Updated Nov 2, 2026
Updated November 2, 2026. Written by Chris Scarfo. Read my editorial policy.
An SBA loan is a small business loan made by a bank or other approved lender and partly guaranteed by the U.S. Small Business Administration. The SBA does not lend the money in most programs. Because the guarantee lowers the lender risk, SBA loans often come with longer terms and lower rate caps than many other small business loans, but they also take more paperwork and time.
Looking for the full overview? Start with my main guide to SBA loans for the big picture on options, terms and how to qualify. This page goes deeper on how the individual SBA loan programs compare, what they ask for, and what they cost.
Quick facts:
- Who lends: participating banks, credit unions, and other approved lenders. The lender makes the credit decision within SBA rules.
- Main programs: 7(a), 504, SBA Express, and Microloans.
- Largest standard 7(a) loan: $5 million.
- Typical timeline: weeks rather than days, depending on the lender and the loan.
Table of Contents
- SBA loan programs compared
- SBA loan requirements
- SBA loan rates and fees
- Documents to prepare
- Pros and cons of SBA loans
- Alternatives if an SBA loan is not the right fit
- SBA loan glossary
- How Lending Gurus helps
- FAQ
- Sources
SBA loan programs compared
| Program | Maximum amount | Common uses | Good to know |
|---|---|---|---|
| 7(a) | $5 million | Working capital, equipment, real estate, refinancing, buying a business | The most flexible and most common SBA program |
| SBA Express | $500,000 | Working capital and lines of credit | A 7(a) option where the lender makes the credit decision, with a 50% SBA guarantee |
| 504 | Up to $5.5 million for the CDC (SBA) portion | Major fixed assets such as real estate and long life equipment | Made through a Certified Development Company alongside a bank. A typical project is up to 50% bank loan, up to 40% CDC loan, and at least 10% from the borrower |
| Microloan | $50,000 | Startups and small working capital, inventory, or equipment needs | Made through nonprofit intermediary lenders, repaid within 6 years |
Maximum terms: 7(a) loans run 10 years or less unless they finance real estate or equipment with a useful life over 10 years, with a maximum of 25 years for real estate. 504 loans come in 10, 20 and 25 year terms. Microloans must be repaid within 6 years. For most 7(a) loans, the SBA guarantees up to 85% of loans of $150,000 or less and up to 75% of larger loans.
Program limits come from the SBA and change from time to time. Confirm current limits with the SBA or your lender before you apply.
SBA loan requirements
The SBA sets baseline eligibility, and each lender adds its own credit standards on top. In general, a business needs to:
- Operate for profit and do business in the United States.
- Meet the SBA size standard for its industry.
- Show the owners have invested their own time or money in the business.
- Be unable to get the same credit on reasonable terms from other sources without the SBA guarantee.
- Be in an eligible industry. Some business types, such as lending and passive real estate investing, are not eligible.
- Have owners of 20 percent or more provide a personal guarantee.
Lenders then look at the same core signals they use for any loan: cash flow that can cover the payment, time in business, credit history, and collateral where available. My guide to working capital loan requirements covers how underwriters read bank statements, and business loan collateral explains how lenders value assets.
SBA loan rates and fees
For 7(a) loans, the borrower and lender negotiate the interest rate, but it cannot exceed the SBA maximum. Rates can be fixed or variable. Variable rate caps are set as a spread over a base rate, such as the prime rate:
| 7(a) loan amount | Maximum variable rate |
|---|---|
| $50,000 or less | Base rate plus 6.5% |
| $50,001 to $250,000 | Base rate plus 6.0% |
| $250,001 to $350,000 | Base rate plus 4.5% |
| More than $350,000 | Base rate plus 3.0% |
The SBA publishes separate maximum fixed rates. 504 loans carry a fixed rate pegged to an increment above the 10 year U.S. Treasury rate, and Microloan rates are negotiated with the intermediary within SBA limits. Lenders can charge less than the cap but not more.
On 7(a) loans the lender pays the SBA an upfront guarantee fee and is allowed to pass that cost on to you. The SBA sets the fee amounts each fiscal year. The lender ongoing annual service fee cannot be charged to the borrower. On 504 loans, fees total roughly 3% of the debenture and can be financed with the loan. You may also see packaging, appraisal, or closing costs, so ask every lender for a full list of fees and the APR.
7(a) loans with a term of 15 years or longer carry a prepayment fee if you prepay 25% or more of the balance in the first three years: 5% of the prepaid amount in year one, 3% in year two, and 1% in year three. To see how rate and term change your payment, try my SBA loan calculator.
Documents to prepare
- Business and personal tax returns, usually for the past several years
- Year to date profit and loss statement and balance sheet
- Recent business bank statements
- A debt schedule listing current loans and balances
- Business licenses, formation documents, and ownership details
- A business plan and projections, especially for startups or acquisitions
- SBA forms your lender provides, such as the borrower information form
SBA rule changes to know in 2026
The SBA tightened a few rules over the last year, and they catch people off guard. Here is what changed, straight from SBA notices and the current SOP 50 10 rulebook:
- Ownership and citizenship. For 7(a) and 504 loans approved on or after March 1, 2026, 100% of the business owners, direct and indirect, have to be U.S. citizens or U.S. nationals whose main home is in the U.S. Lawful permanent residents no longer qualify as owners, and the SBA looks back six months at who owned the business.
- Equity injection. Startups (businesses with one year or less of revenue from their main operations) and full changes of ownership need to put in at least 10% of total project costs. A seller note only counts toward that if it is on full standby for the life of the loan, and it can cover no more than half of the required injection.
- Collateral. The SBA does not require collateral on 7(a) loans of $50,000 or less. Above that, lenders follow their own collateral policies, but SBA rules say a loan is not to be declined only because collateral is short.
- Credit elsewhere. You still have to show you cannot get the same credit on reasonable terms from non government sources. That is the whole point of the guarantee.
If any of these knocks you out, a non SBA option may still fit. My guide to SBA loan requirements walks through each rule in more detail.
Worked example: what a 7(a) payment looks like
Say you borrow $250,000 on a 10 year 7(a) working capital loan at 10.5%. That rate is just an example. Your lender quotes the real one, and for a loan this size the variable rate cap is the base rate plus 6.0%.
- Monthly payment: about $3,373
- Total paid over 10 years: about $404,800
- Total interest: about $154,800, before any guarantee fee or closing costs
Stretch the same loan to 25 years (only possible when real estate is involved) and the payment drops a lot, but you pay far more interest over time. Plug your own numbers into my SBA loan calculator to see payment, total interest and how term changes the math.
Pros and cons of SBA loans
| Pros | Cons |
|---|---|
| Longer repayment terms than many other small business loans | More paperwork and a longer timeline |
| Rate caps set by the SBA | Personal guarantees from larger owners |
| Can cover goodwill when buying a business | Collateral may be required when available |
| Flexible uses under the 7(a) program | Not every industry or business qualifies |
Alternatives if an SBA loan is not the right fit
- Need funds quickly: compare unsecured business loans and lines of credit.
- Waiting on customer payments: look at invoice financing companies.
- Buying machinery: see the heavy equipment financing guide.
- Want to compare many lenders at once: start with my business loan comparison.
Buying an existing company? Read how to finance buying an existing business, which covers the SBA 7(a) equity injection and seller notes.
SBA loan glossary
- Guarantee: the share of the loan the SBA promises to repay the lender if the borrower defaults. It protects the lender, not the borrower.
- Preferred Lender: a lender the SBA allows to make many approval decisions itself, which can speed things up.
- Certified Development Company (CDC): a nonprofit partner that provides the SBA portion of a 504 loan.
- Equity injection: the cash or other eligible funds the borrower puts into the project.
- Personal guarantee: a promise by an owner to repay the loan personally if the business cannot.
- Size standard: the SBA limit, by industry, on revenue or employees for a business to count as small.
- SOP: the SBA Standard Operating Procedure, the rulebook lenders follow.
Not sure an SBA loan fits yet? My business loan eligibility checker compares your profile with the patterns SBA lenders and other partners often look at, with no credit check.
How Lending Gurus helps
Lending Gurus does not lend money or approve loans. Guru matches business owners with lending partners, including partners that offer SBA loans, and those partners make every credit decision. There is no hard credit pull to get matched. See how matching works.
FAQ
Does the SBA lend money directly?
For most programs, no. Banks and other approved lenders make the loan, and the SBA guarantees part of it. The SBA does make some direct loans, such as disaster loans.
How long does it take to get an SBA loan?
It depends on the lender, the program, and how complete your file is. SBA loans usually take longer than online business loans, so plan ahead.
Can a startup get an SBA loan?
It is possible, especially through Microloans or a 7(a) loan with a strong plan, owner investment, and relevant experience, but lenders are generally more cautious with newer businesses.
Do SBA loans require collateral?
The SBA does not require collateral on 7(a) loans of $50,000 or less. Above that, lenders follow SBA collateral rules, which generally call for collateral when it is available. A lack of collateral alone is not always a reason to decline under SBA rules, but each lender decides.
Who can own a business that gets an SBA loan in 2026?
For 7(a) and 504 loans approved on or after March 1, 2026, every direct and indirect owner has to be a U.S. citizen or U.S. national whose main home is in the U.S. Lawful permanent residents no longer count as eligible owners.
How much do I need to put down on an SBA loan?
There is no set down payment for every loan. Startups and full changes of ownership need at least 10% of project costs. 504 projects typically need at least 10% from the borrower. Existing businesses borrowing for working capital may not need a set injection, but the lender decides what it wants to see.
What is the most I can borrow with an SBA loan?
Most 7(a) loans top out at $5 million, SBA Express at $500,000, Microloans at $50,000, and the SBA portion of a 504 loan at $5.5 million.
Sources
- Loans, U.S. Small Business Administration
- 7(a) loans, U.S. Small Business Administration
- 504 loans, U.S. Small Business Administration
- 7(a) terms, conditions, and eligibility, U.S. Small Business Administration
- Microloans, U.S. Small Business Administration
This article is general information, not financial or legal advice. Loan programs, limits, rates, and terms are set by the SBA and individual lenders and can change. Confirm current details with a lender before you apply.