What it is
The SBA doesn't lend the money itself. A bank or nonprofit lender does, and the SBA guarantees part of it, which lets the lender say yes to businesses it otherwise wouldn't and to give longer terms.
7(a) loans are the general kind: up to $5 million for working capital, equipment, property or buying a business (7(a) Small loans are $350K or less; Express loans, decided faster by the lender, up to $500K). 504 loans fund property and long-lived equipment at a long fixed rate, through a bank and a nonprofit development company together. Microloans, up to $50,000 (about $13,000 on average), come from nonprofit lenders and can fund a start-up.
What it really costs per year
7(a) rates are negotiated but capped at prime plus a margin set by size. With prime at 7.00% (early November 2026), the caps are 13.5% up to $50K, 13.0% up to $250K, 11.5% up to $350K and 10.0% above that, and most borrowers are quoted below the cap. On top, an upfront guarantee fee of 2% to 3.75% of the guaranteed part applies to most loans over 12 months (waived for some manufacturers, food-supply businesses and rural businesses in the year from October 2026).
504 loans run cheaper: the development company's part was about 6.6% fixed for 20 to 25 years in November 2026, fees included. Microloans generally run 8–13%.
Work out the yearly cost of an offer you have
How fast the money comes
Usually one to three months from application to money; the SBA's own review takes days, and the rest is the lender's paperwork and closing. Express loans and some microloans are faster.
Who qualifies
- Typically two years in business and an owner's credit score around 650 or higher for 7(a); start-ups and business purchases need at least 10% put in by the owners.
- Owners of 20% or more give an unlimited personal guarantee, and loans over $50,000 usually need collateral.
- Microloan lenders often take scores around 620, sometimes lower, and lend to start-ups.
Where it breaks
- Approval is far from certain: in the Federal Reserve's 2026 survey, 32% of SBA applicants were fully approved and 40% were turned down.
- The personal guarantee and collateral can reach your home.
- It's slow, and the paperwork is heavy. 504 loans can't fund working capital or inventory, and microloans can't pay off debt or buy property.
- Paying off a long 7(a) loan early in its first three years can carry a penalty.
Compare with
- Bank loans and lines of credit: yearly cost about 7–11%, money in 2–8 weeks.
- Community lenders (CDFIs) and local programs: yearly cost about 7–13%, money in weeks to 2 months.
- Equipment and vendor financing: yearly cost about 6–22%, money in days to 2 weeks.