SBA 7(a) Loans: What They Fund, What They Cost and Who Qualifies
The SBA's general-purpose loan, made by a participating lender and partly guaranteed by the SBA.
Soft credit pull only, no obligation
Rates, factor rates, fees and terms are set by the funding provider that makes your offer and are disclosed in that provider's agreement. Figures on this page are illustrative ranges from providers in our network, not offers. On a 7(a), the participating lender sets the rate within the SBA's maximum and discloses the guarantee fee and its own fees.
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At a glance
| Program maximum | $5 million, set by SBA rules; the lender decides the amount within it |
|---|---|
| Term length | Up to 10 years for working capital and equipment, up to 25 years for real estate, set by the lender under SBA rules |
| Time to funding | Several weeks to a few months, subject to provider approval and document turnaround |
| Collateral | The lender takes the collateral that exists, and every owner of 20% or more signs a personal guarantee |
| Cost expressed as | An interest rate the lender sets within the SBA maximum, fixed or variable, plus the SBA guarantee fee and the lender's fees |
| Guarantee | 85% of a loan of $150,000 or less, 75% above, paid to the lender, not to you |
|---|---|
| Capital Gurus' role | Referral and application help. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. |
No 7(a) rate appears on this page: the lender quotes it once it has your file.
What is an SBA 7(a) loan?
Definition
An SBA 7(a) loan is the SBA's general-purpose loan: a bank, credit union or other participating lender lends, and the SBA guarantees part of it.
One lender, one loan, a long maturity. What holds for every SBA program sits on the SBA loans overview.
Why does the guarantee share matter?
The lender keeps part of every 7(a) on its own books, so it underwrites like a lender with money at risk.
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The SBA covers 85% of a 7(a) of $150,000 or less and 75% above that, per the SBA's 7(a) loan terms. It protects the lender, not you: you still owe the balance.
What is the credit-elsewhere test?
Before submitting a 7(a), the lender must certify that the credit is not available elsewhere on reasonable terms.
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A business a bank would finance conventionally this month is the wrong candidate, and so is one no lender would touch. The 7(a) lives between the two.
What can a 7(a) loan be used for?
Working capital, equipment, owner-occupied property, buying a business or a partner's share, and eligible refinancing.
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Not rental or investment property, lending, speculation or money taken out to the owners. What SBA loans can be used for walks the rules.
How much you can get, and over how long
The program maximum above is an SBA rule, not a range you choose from: inside it, the lender sizes the loan to what your cash flow covers.
What the lender weighs
- Cash flow against the payment
- Credit history
- Owner equity
- The purpose of the money
Working capital or real estate?
Working capital and equipment
The shorter limit.
Real estate
The longest limit the program allows.
Typical SBA 7(a) terms run up to 10 years for working capital and up to 25 years for real estate, set by the lender under SBA rules.
Two habits that keep a 7(a) moving
Name the purpose in week one: an ineligible use cannot be fixed later.
Run your own debt service coverage before the lender does.
One application, and an advisor reads your file before any lender does.
How the cost of a 7(a) is expressed
The participating lender sets the interest rate within the SBA maximum: a base rate plus a capped spread, fixed or variable.
A variable rate
Moves with the base rate, inside the program cap.
The payment can changeA fixed rate
Set at closing, inside the program cap.
The payment is known at closing
On top of the rate, disclosed by the lender
- SBA guarantee fee
- Packaging and closing
- Appraisal, title and legal
- Prepayment fee on long loans
SBA loan rates explains how the cap is built.
No 7(a) rate or payment appears on this page: the lender quotes those once it has your file.
See who qualifiesWhen the prepayment fee applies
On a 7(a) with a maturity of 15 years or more, program rules charge a declining fee if you prepay more than a quarter of the balance in the first three years. Planning to sell or refinance early? Ask for the schedule first.
Who qualifies for a 7(a)
| U.S. | for-profit business inside the SBA size standard |
|---|---|
| 20% | owners at this share or more sign a personal guarantee |
| 10% | buyer equity on a complete change of ownership |
A seller note counts toward the buyer's equity only on full standby for the whole term of the 7(a) loan, and the lender takes the collateral that exists.
The program tests above, including the owners' personal guarantee, are in the SBA's lending rules, SOP 50 10. We publish no SBA credit-score, revenue or time-in-business minimum: those belong to each lender. See business loan requirements.
What the lender's credit test reads
Conventional underwriting, done by the lender.
Filed business and personal returns.
Cash flow that covers the new payment.
Clean personal credit, no unpaid federal debt.
Owner equity in the purchase.
When a 7(a) is the right tool, and when it is not
A large, long-lived purpose in an established, profitable business that can wait.
| Ask yourself | Good use | Not for |
|---|---|---|
| Is it a general purpose? |
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| Can it wait weeks? |
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Is it a general purpose?
- Buying a business or a partner's share.
- Rental or investment property. It is ineligible.
Can it wait weeks?
- Expanding into premises you will occupy.
Better fit elsewhere
Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Compare the SBA programs
The 7(a) fits a general purpose and a larger amount. Property-only projects, smaller files and younger businesses often fit another program better.
- SBA loans overview
What holds for every program: who lends, what the guarantee covers, and the timeline.
- SBA 504 loans
Owner-occupied property or long-lived equipment only, with a CDC beside the lender.
- SBA Express loans
A 7(a) variant up to $500,000, with a smaller guarantee and more of the lender's own process.
- SBA microloans
Up to $50,000 through a non-profit intermediary, for smaller needs and younger businesses.
Related financing
- business term loans
A fixed amount, repaid on a schedule you can put in the budget.
- business line of credit
Standby capital you draw only when you need it, then draw again.
SBA 7(a) loan questions
In short
An SBA 7(a) loan is the general-purpose program among SBA loans: a loan from an SBA-participating lender, partly guaranteed by the SBA, up to $5 million, priced as a capped rate plus fees. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. The lender and the SBA decide, in weeks rather than days.
What is an SBA 7(a) loan?
The 7(a) is the SBA's main program: a loan from an SBA-participating lender, partly guaranteed by the SBA, that can fund working capital, equipment, owner-occupied property, eligible refinancing or the purchase of a business. The program maximum is $5 million. The lender sets the rate within SBA maximums.
What can an SBA 7(a) loan be used for?
Working capital, equipment, furniture and fixtures, owner-occupied commercial property, buying a business or a partner's share, and refinancing business debt where the refinance improves the position. It cannot fund rental or investment property, lending, speculation, or distributions to the owners.
How much can I borrow on a 7(a), and how long do I get?
Programme rules cap a 7(a) at $5 million, and typical terms run up to 10 years for working capital and equipment and up to 25 years for real estate. Inside those caps the participating lender decides both, based on what your cash flow covers.
Can I use a 7(a) to buy a business?
Yes: buying a business or a partner's share is an eligible 7(a) purpose. On a complete change of ownership, program rules expect buyer equity of at least 10% of total project cost. A seller note counts toward it only on full standby for the whole term of the 7(a) loan. The lender values the business and decides.
Does every owner have to sign a personal guarantee?
Every owner of 20% or more does. That is an SBA rule rather than something the lender chooses, and it survives the guarantee: if the loan defaults, the SBA reimburses the lender for part of its loss and you still owe the balance.
How long does a 7(a) take, and what slows it down?
Usually several weeks to a few months from a complete package to funding, subject to provider approval and document turnaround. The lender underwrites, the SBA reviews the guarantee, then closing adds appraisals and legal work. Missing statements, unfiled returns, unsigned forms and unpaid federal debt cause most delays, and all four are in your control.
Does Capital Gurus make 7(a) loans?
Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. We read the file, tell you plainly whether it looks like a 7(a), help assemble the package and refer it to participating lenders. We make no credit decision and set no rate. Any fee paid to a packager or referral agent is disclosed on SBA Form 159.
Still have a question?
talk to a funding advisorCapital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. Capital Gurus is not an affiliate of the U.S. Small Business Administration. Rates, fees and terms are set by the participating lender and are disclosed in that lender's agreement. Capital Gurus · 1700 S Pavilion Center Dr, Ste 420, Las Vegas, NV 89135.
Nothing on this page is financial, legal or tax advice.
Buying a business or your premises? See whether an SBA 7(a) fits your file.
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