SBA 7(a) Loan
The U.S. Small Business Administration's SBA 7(a) Loan program is the SBA's primary business loan program for providing financial assistance to small businesses. It is designed to expand access to financing to current and prospective American small business owners. The program is so named because it was originally created by Section 7(a) of the Small Business Act of 1953, which also created the SBA itself.
The 7(a) program is a public-private partnership. The lenders make the credit decisions and lend the money, as with a conventional loan, while the U.S. federal government provides a partial guarantee of the loan to the lender. This guarantee incentivizes the lender to make riskier credit decisions, allowing them to lend to a wider array of borrowers than they would otherwise.
The 7(a) program is designed to operates as a zero-subsidy program, operating without taxpayer funds. This is possible due to loan fees charged by the SBA, which typically bring in more revenue than the SBA must pay out in guarantees for unsuccessful loans.[1]
70,242 SBA 7(a) loans were approved in FY2024, worth a combined $31.1 billion.[2]
Uses
SBA 7(a) loans have a wide array of uses. Common uses for SBA 7(a) loans include:[3]
- Real estate purchase
- Business purchase (full or partial)
- Construction
- Loan refinance
- Working capital
- Equipment/machinery purchase
- Furniture, fixture, and supply purchase
- Multiple purpose loans, including any of the above
Eligibility
Business
To be eligible to receive an SBA 7(a) loan, a business must:[4]
- Be an operating, for-profit business
- Be located in the U.S. (including territories)
- Be a small business, per SBA size requirements
- Be creditworthy and demonstrate a reasonable ability to repay the loan
- Not be a type of ineligible business
- Not be able to obtain the desired capital from a conventional loan
Notably, investment businesses (any business where the majority of revenue is from rent, such as multifamily housing, strip malls, etc.) are ineligible for SBA 7(a) loans.[4]
Personal
All owners must:[5]
- Be an American citizen, legal foreign national, or permanent resident
All owners of 20% or more of the business must:[6]
- Not be currently incarcerated or under indictment
- Not have a previous failed government-backed loan
Terms
Maximum loan value
$5,000,000[4]
Minimum down payment
None on loans $500,000 or below and loans over $500,000 that don't include a change of ownership, 10% on loans over $500,000 that include a change of ownership.[7]
Interest rate
Based on the prime rate.[4]
No set minimum, but typically at least prime + 1%.
By rule may be no higher than prime + 3% for loans $350,000+ (but can be higher for smaller loans).
Loan term
Maximum term of 25 years for loans involving real estate and 10 years for loans not involving real estate.[4]
Collateral
Must be fully collateralized if possible. Some common forms of collateral taken by the lender are the real estate involved in the loan (if applicable), a business's account's receivable or inventory, and an owner's personal assets.[8]
Personal guarantee
Required from all owners of over 20% of the business.[8]
Amortization
Fully amortized.
Prepayment penalty
Decreasing over a three-year period, 5%-3%-1%, with no penalty in years 4+.[4]
SBA Guaranty Fee
For FY2025:[9]
For loans of <$150,000, the guaranty fee is 2% of the guaranty value.
For loans of $150,001-$700,000, the guaranty fee is 3% of the guaranty value.
For loans of >$700,000, the guaranty fee is 3.5% of the first $1,000,000 in guaranty value, then 3.75% of the guaranty value over $1,000,000 (if applicable).
The SBA has a 7(a) loan guaranty fee calculator for borrowers, allowing them to see their potential guaranty fee.
Process
The SBA 7(a) loan process is typically longer than that of conventional loans. The process differs depending on the size and complexity of the loan, but usually takes 45-90 days.
The SBA 7(a) loan process can be broken down into four phases and 16 steps:
Phase 1: Choosing a Lender
Step 1: Finding a lender
Step 2: Initial consultation with lender
Phase 2: Pre-Qualification
Step 3: Initial document request
Step 4: Initial document gathering and preparation
Step 5: Initial document submission
Step 6: Preliminary underwriting
Step 7: Prequalification
Phase 3: Underwriting and Approval
Step 8: Full underwriting
Step 9: Loan approval/commitment letter
Phase 4: Closing
Step 10: Deposits
Step 11: Third party reports
Step 12: Closing document request
Step 13: Closing document gathering and preparation
Step 14: Closing document submission
Step 15: Review and approval of closing documents
Step 16: Loan closing and disbursal
Lenders
SBA 7(a) lenders include banks, credit unions, and non-bank lenders, including small business lending companies (SBLCs).
Banks and credit unions can earn Preferred Lender program (PLP) lender status, which allows them to handle the entire loan process themselves without extensive SBA review and approval. Without PLP status, a lender must send their loans through SBA general processing (GP), a longer and more cumbersome process.[10]
In FY2024, 23,848 lenders completed at least 1 SBA 7(a) loan, and 393 completed at least 10 SBA 7(a) loans.[11]
| National Rank | Lender | Number of Loans | Total Value of Loans |
|---|---|---|---|
| 1 | Newtek Small Business Finance | 3,819 | $2,098,740,400 |
| 2 | Live Oak Banking | 1,440 | $1,983,953,500 |
| 3 | Huntington National Bank | 7,577 | $1,530,064,700 |
| 4 | Readycap Lending | 3,571 | $1,042,855,800 |
| 5 | U.S. Bank | 3,119 | $708,227,200 |
| 6 | JPMorgan Chase | 2,553 | $626,150,300 |
| 7 | Bank of America | 1,190 | $609,574,600 |
| 8 | First Internet Bank of Indiana | 397 | $580,272,200 |
| 9 | TD Bank | 3,996 | $569,701,600 |
| 10 | Wells Fargo | 2,224 | $567,031,300 |
| 11 | BayFirst National Bank | 3,187 | $508,046,500 |
| 12 | Byline Bank | 410 | $504,582,400 |
| 13 | Celtic Bank | 960 | $499,440,300 |
| 14 | GBank | 179 | $474,608,300 |
| 15 | First Bank of the Lake | 705 | $389,591,300 |
| 16 | Harvest Small Business Finance | 331 | $330,823,000 |
| 17 | Cadence Bank | 793 | $293,718,200 |
| 18 | Northeast Bank | 2,552 | $289,033,200 |
| 19 | United Midwest Savings Bank | 843 | $279,922,300 |
| 20 | Old National Bank | 241 | $262,459,100 |
| 21 | Bank of Hope | 283 | $245,287,500 |
| 22 | Berkshire Bank | 189 | $236,670,700 |
| 23 | KeyBank | 702 | $226,749,400 |
| 24 | M&T Bank | 1,832 | $207,807,100 |
| 25 | Enterprise Bank & Trust | 162 | $205,674,200 |
Documents
Lenders require many documents to complete an SBA 7(a) loan, and the gathering/preparation of such documents is the primary focus of the effort and time spent on the loan process by the borrower. Exactly what documents are required for a loan will differ based on the lender and details of the loan.
Personal
The following are personal documents that are typically required from each owner of over 20% of the business:
- 1040 personal tax returns
- Personal financial statement
- SBA Form 1919 (Borrower Information)
- Resume
- Signed Credit Authorization
- Driver's license/ID
Business
The following are documents that are typically required from the business:
- Tax returns (past three years)
- Profit and loss statements (past three years)
- Current (year-to-date) profit and loss statement
- Current (year-to-date) interim financial statement
- Current balance sheet
- Business entity documents
- Insurance policies
- Equipment list
Conditional
The following are documents that are typically required if applicable to the particular business/loan:
- Purchase and sale agreement
- Affiliate business financials
- Lease(s)
- Franchise agreement
- Additional collateral documents
History
The SBA 7(a) program was established in 1953 along with the SBA itself.[12]
| Fiscal Year | Loans Approved | Approval Amount ($) |
|---|---|---|
| 1992 | 23,655 | $5,880,429,292 |
| 1993 | 26,291 | $6,690,995,672 |
| 1994 | 36,049 | $8,142,444,017 |
| 1995 | 55,548 | $8,251,957,812 |
| 1996 | 45,853 | $7,694,062,736 |
| 1997 | 45,288 | $9,461,352,612 |
| 1998 | 42,271 | $9,016,559,155 |
| 1999 | 43,634 | $10,146,109,913 |
| 2000 | 43,748 | $10,523,436,538 |
| 2001 | 42,958 | $9,894,022,393 |
| 2002 | 51,666 | $12,208,026,875 |
| 2003 | 67,306 | $11,268,200,031 |
| 2004 | 81,133 | $13,571,560,391 |
| 2005 | 95,900 | $15,223,525,886 |
| 2006 | 97,291 | $14,525,100,339 |
| 2007 | 99,606 | $14,292,141,213 |
| 2008 | 69,437 | $12,671,235,790 |
| 2009 | 41,288 | $9,191,044,339 |
| 2010 | 47,000 | $12,406,048,700 |
| 2011 | 53,710 | $19,640,298,400 |
| 2012 | 44,376 | $15,153,504,000 |
| 2013 | 46,395 | $17,865,672,500 |
| 2014 | 52,044 | $19,190,547,800 |
| 2015 | 63,461 | $23,583,863,400 |
| 2016 | 64,074 | $24,128,426,343 |
| 2017 | 62,430 | $25,447,458,500 |
| 2018 | 60,354 | $25,372,539,100 |
| 2019 | 51,907 | $23,175,811,000 |
| 2020 | 42,298 | $22,549,825,700 |
| 2021 | 51,856 | $36,536,756,800 |
| 2022 | 47,678 | $25,693,805,700 |
| 2023 | 57,362 | $27,515,666,000 |
| 2024 | 70,242 | $31,124,036,200 |
References
- ^ 15 U.S.C. § 636(a)(23)(A).
- ^ "Workbook: 7a504LenderReport". careports.sba.gov. Retrieved 2025-08-05.
- ^ "7(a) loans | U.S. Small Business Administration". www.sba.gov. Retrieved 2025-08-05.
- ^ a b c d e f "Terms, conditions, and eligibility | U.S. Small Business Administration". www.sba.gov. Retrieved 2025-08-05.
- ^ "NEW Policy Notice Makes Major Changes to Eligibility Requirements for Non-US Citizens - NAGGL". 2025-04-09. Retrieved 2025-08-05.
- ^ 13 CFR 120.110
- ^ Daniels, Dawn (2025-02-20). "SBA Loan Down Payment: How Much Is Required?". LendingTree. Retrieved 2025-08-05.
- ^ a b "SBA Loan Collateral Requirements". First Business Bank. Retrieved 2025-08-05.
- ^ "SBA Announces 7(a) Fee Revisions for Remainder of FY 25 - NAGGL". 2025-04-09. Retrieved 2025-08-05.
- ^ Anderson, Tim (2025-06-16). "Key Credit Memo Elements to Include on an SBA Loan Application". Windsor Advantage. Retrieved 2025-08-05.
- ^ a b Small Business Administration. (2024, September 30). Lender7AActivity_FY2024_20240930. https://web.data.sba.gov/en/dataset/7-a-504-activity-reports-fy2024-year-end/resource/0bfba7ae-5512-4e84-81bc-9ace42cdf0f4
- ^ Small Business Administration 7(a) Loan Guaranty Program. (2025, August 4). https://www.congress.gov/crs-product/R41146