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SBA Loans Explained: 7(a), 504, Express and Microloans

What the SBA actually does, which program fits which purpose, what it costs, and how to get through the process faster.

LoansUpdated November 2026Reviewed by the Loanistry editorial teamHow we rateHow we make money9 min read
In short

SBA loans are made by banks and other approved lenders and partly guaranteed by the U.S. Small Business Administration. The guarantee lets lenders offer lower rates and longer terms than they otherwise would. The 7(a) program covers most purposes up to $5 million, 504 loans finance real estate and heavy equipment, Express loans up to $500,000 move faster, and microloans up to $50,000 serve very small businesses.

Key takeaways

  • The SBA guarantees loans; it does not make them. You apply through a lender.
  • 7(a) is the general-purpose program; 504 is for fixed assets; Express trades a lower guarantee for speed.
  • Expect 30 to 90 days and a full document package.
  • Rates are capped at prime plus a spread, far below online lenders.

What an SBA loan is

The Small Business Administration does not lend money directly for most programs. It guarantees a portion of loans made by banks, credit unions and some nonbank lenders, typically 75% to 85% of the balance. If you default, the SBA repays the lender that share. The guarantee is why a lender will approve a loan that would fail its normal credit policy, and why the price is close to a conventional bank loan.

The main programs

  • 7(a). Up to $5 million for working capital, equipment, acquisitions, refinancing and real estate. Terms up to 10 years, 25 for real estate. The workhorse program.
  • 504. Long-term fixed-rate financing for major fixed assets through a Certified Development Company. Typically 50% bank, 40% CDC, 10% borrower down payment.
  • Express. Up to $500,000 with a 50% guarantee and a 36-hour SBA turnaround on its part of the review. Lenders can use their own forms, which speeds things up.
  • Microloans. Up to $50,000 through nonprofit intermediaries, often with technical assistance. Average loan is around $13,000.
  • CAPLines, Export, Disaster. Specialized lines for seasonal working capital, exporters and declared disasters.

What it costs

Variable 7(a) rates are capped at the prime rate plus 3% to 6.5% depending on loan size, which puts most loans in the 10.5% to 14.5% range at current prime. Fixed-rate options are available. Guarantee fees range from zero on smaller loans to about 3.75% on the guaranteed portion of large loans, and can be financed. Compared with online term loans at 30% to 100% APR, the difference over a five-year term is enormous.

Who qualifies

You need to be a for-profit business operating in the United States, meet SBA size standards, have invested your own equity, and be unable to get the same credit on reasonable terms elsewhere. In practice lenders look for a 650+ personal score, two or more years in business, positive cash flow sufficient to cover the payment with room to spare, and collateral where available. Owners of 20% or more sign personal guarantees.

How to apply, faster

  1. Use a Preferred Lender. PLP lenders approve loans without sending them to the SBA for review, which cuts weeks.
  2. Ask about Express first if you need $500,000 or less.
  3. Prepare the full package before the first call: three years of business and personal returns, interim financials, debt schedule, SBA Forms 1919 and 413, a use-of-funds statement, and entity documents.
  4. Answer underwriting questions the same day. Most delays are the borrower's.

See our SBA loan calculator to model the payment.

SBA loan versus online loan

If you qualify for both and can wait, the SBA loan wins on cost every time. Online loans win when the opportunity closes before an SBA loan could fund, when the amount is small enough that the paperwork is not worth it, or when your file is below the SBA's practical thresholds. Many owners do both: an online line to bridge, then an SBA loan to refinance it.

Frequently asked questions

What is the minimum credit score for an SBA loan?
The SBA sets no minimum, but lenders generally want 650 or higher; 680+ gets the best terms. Some microlenders go lower.
Can a startup get an SBA loan?
Yes, but it is harder. Expect a larger equity injection (often 10% to 30%), a detailed business plan, and relevant industry experience. Microloans are the most startup-friendly SBA program.
How long do SBA loans take?
30 to 90 days is typical. Express loans and Preferred Lenders can shorten that to a few weeks.

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