An SBA loan is a long-term, low-interest small business loan partly backed by the U.S. government.
Every single year, 30% of all small businesses fail simply because the owners have run out of money.
Why Choose an SBA Loan with Lending Valley?
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Lower interest & longer terms – keep monthly payments manageable
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Flexible uses – working capital, equipment, acquisitions, real estate, refinancing
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Down payments as low as ~10% (use-case dependent)
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Expert guidance – documentation prep, lender matching, and application support
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Multiple programs – 7(a), CDC/504, and Microloan options
Note: SBA loans are issued by participating lenders and partially guaranteed by the SBA. Approval, rates, and terms depend on lender underwriting and program rules.
If you’re interested in moving forward with an SBA loan, you want to pay close attention to the inside information shared below!
Advantages of an SBA loan
- Incredibly low down payments are required for high levels of financing
- Very long repayment terms
- Reasonable interest rates are tough to find elsewhere
- Applicable to a wide variety of businesses and business purposes
What you need to know about an SBA loan before applying?
- The application process is long and drawn out
- The approval process is just as long and just as drawn out
- Entrepreneurs may have to put up collateral to secure these kinds of financing packages
Which SBA Program Fits Your Goal?
Quick Comparison: SBA 7(a) vs CDC/504 vs Microloan
| Feature | SBA 7(a) | SBA CDC/504 | SBA Microloan |
|---|---|---|---|
| Typical Use | Working capital, inventory, equipment, refinancing, business acquisition, real estate | Fixed assets only: owner-occupied commercial real estate, major equipment, build/renovate | Small working capital needs, inventory, furniture/equipment, startup costs |
| Max Amount | Up to $5M | SBA portion up to $5M–$5.5M (typ.) within a bank+CDC structure (total project can be larger) | Up to $50k |
| Rate Type | Often variable (can be fixed); SBA-capped | Fixed on the SBA/CDC portion (bank side can be fixed/variable) | Set by local intermediaries (typically higher than 7(a)/504) |
| Terms | Up to 10 years (working capital/equipment); up to 25 years (real estate) | 10/20/25 years (asset-based) | Up to 6 years |
| Down Payment | Often ~10% when purchasing a business/asset | 10% standard (15–20% for startups/special-use properties) | Varies; usually none in the classic sense |
| Collateral | Secured to the extent possible; personal guarantees required | Asset financed serves as primary collateral; personal guarantees required | Often requires some collateral/PG; more flexible for very small loans |
| Best For | Versatile needs, acquisitions, mixed uses | Buying/renovating owner-occupied real estate or heavy equipment with low, fixed rates | Very small funding needs and startups |
Not sure which fits? Tell us your goal, timeline, and budget, we’ll align you with the right program.
Eligibility Snapshot (What Lenders Look For)
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U.S. for-profit small business (per SBA size standards)
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Time in business: generally 2+ years preferred (startups may qualify via microloan or specific 7(a) use cases)
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Credit: strong personal credit is important (upper-600s+ typically competitive); business credit is helpful
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Cash flow: ability to service debt from business operations
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Collateral & guarantees: pledged to the extent available; 20%+ owners sign personal guarantees
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Equity injection: often ~10% for acquisitions/real estate/equipment
Lenders evaluate the full picture. If one area is weaker, strength elsewhere (cash flow, collateral, experience) can help.
What You Can Finance
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Working capital and cash-flow smoothing
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Equipment & machinery purchases
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Business acquisition or partner buyout
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Owner-occupied real estate (purchase, build, or renovate)
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Debt refinancing (to improve cash flow)
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Startup and micro funding (via SBA Microloan intermediaries)
What’s the SBA Application Process like?
If you’re wondering whether the SBA has approved your bank or a bank you’re interested in working with, it takes just one quick phone call to find out.
After that, you only need to visit the offices directly in person and begin the SBA loan package process, and the professionals at the bank will help you walk you through this step.
You will want to make sure that you bring important documents to streamline the process with you during this meeting, including:
- Your driver’s license or government-issued ID
- A voided business check to your business bank account
- Bank and financial statements for your business
- Balance sheet and P & L statements
- Tax return information for both you and your business
- A detailed business plan
- A detailed business debt schedule
The financial institution you’re pursuing your SBA loan through will be able to walk you through the rest of the process and let you know what other kinds of documents or paperwork need to be processed and when they need to be processed as well.
Rates, Fees & Payments (What to Expect)
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Interest rates: SBA-capped and often below non-SBA alternatives
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Terms: up to 10 years (working capital/equipment) and up to 25 years (real estate)
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Guarantee/packaging fees: one-time, may be financed into the loan
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Closing costs: appraisals, environmental, legal/filing (for real estate/equipment)
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Prepayment: limited penalties may apply on some long-term loans (e.g., 504 or long-term 7(a)); ask us to model scenarios
We’ll itemize all costs up front and show your true monthly payment and total cost of capital before you proceed.
How Exactly Do SBA Loans Work?
SBA loans are considered the “Holy Grail” of business financing, mostly because they offer a fantastic line of financing you can take advantage of for a multitude of business purposes while also including friendly interest rates and repayment terms you’ll have a tough time finding anywhere else.
There are a couple of different SBA loan programs available. The three biggest and most popular programs include:
- 7(a) Loan Program
- Micro Loan Program and
- CDC/504 Loan Program
The 7(a) loan program can provide you with up to $5 million in financing straightaway, with a repayment timeline that stretches out to 10 years (for working capital style loans) or 25 years (for commercial real estate lending packages), and also has a tremendous amount of flexibility about how you use that financing moving forward.
The Micro Loan Program provides quick cash to newer businesses through the SBA, focusing on financing good for up to $50,000 with a loan repayment timeline that stretches up to six years, again with really friendly interest rates.
The CDC/504 loan program is usually taken advantage of by companies that need to finance major fixed assets (like big equipment expenditures or the purchase of commercial real estate, for example).
These loan packages offer upwards of $5.5 million in financing over a repayment timeline of between 10 and 20 years, though it is a little bit more restrictive and how you use the financing you have been green-lit for.
Fees for these kinds of loans are pretty attractive as well, especially when you’re talking about the 7(a) style loans. You’ll be asked to pay a guarantee fee of 1.7% for any of the SBA loans you take for up to $150,000 and a flat 2.25% for any loans greater than that amount.
Your interest rate is going to sit at a maximum – yes, your reading that correctly, MAXIMUM – of 2.75% plus whatever the current prime rate is.
That’s certainly one of the biggest draws for these kinds of loan packages.
Our Process for the SBA Loan Application
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Fit & Program Match (Free Call)
Clarify use of funds, timing, and program fit (7(a) vs 504 vs Microloan). -
Document Prep
We share a lender-ready checklist (financials, tax returns, bank statements, debt schedule, IDs, business plan/summary, purchase agreements if applicable). -
Application & Underwriting
We submit to a strong SBA-preferred lender and manage follow-ups to keep things moving. -
Approval, Closing & Funding
Review terms, finalize closing items, and fund. Typical timelines range 4–12+ weeks, depending on complexity.
When to Choose Each Program
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Choose 7(a) if you want flexibility (working capital, acquisition, mixed uses) or need to refinance costlier debt.
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Choose CDC/504 if you’re buying or renovating owner-occupied real estate or purchasing major equipment and want fixed rates with only 10% down.
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Choose Microloan if you need $50k or less (startup supplies, small equipment, initial inventory) and prefer a community lender experience.
SBA Loans: FAQs
Are SBA loans forgivable?
No. Standard SBA loans (7(a), 504, Microloan) are not forgivable; they’re amortizing loans with monthly payments.
How long does funding take?
Plan on 4–12+ weeks from complete application to funding. Microloans and SBA Express can be faster; real estate (504) can take longer due to appraisals and third-party reports.
What credit score do I need?
Lenders commonly look for upper-600s+ personal credit for 7(a)/504. Microloans can be more flexible. Strong cash flow, collateral, and experience help.
Do I need collateral or a down payment?
Expect collateral to the extent available and personal guarantees from 20%+ owners. For purchases (business/real estate/equipment), plan for ~10% equity. 504 uses the asset as primary collateral.
Can startups get an SBA loan?
Yes—typically via microloans or specific 7(a) scenarios (e.g., franchise or acquisition with strong projections and experience). Startups may face higher equity and documentation requirements.
What can’t I use an SBA loan for?
Passive/investment real estate, speculative ventures, and non-business personal use are not eligible. 504 funds can’t be used for working capital or inventory.
How do rates compare to online loans?
SBA rates/terms are usually much more affordable due to the government guarantee and longer amortization.
Ready to Explore Your SBA Options?
Get a no-pressure assessment in minutes. We’ll confirm program fit, estimate payments, and share a clean checklist to get you lender-ready.
→ Check SBA Eligibility
→ Speak to an SBA Specialist
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