SBA Loan Calculator

SBA Loans: A Complete Guide for Small Business Owners

Small Business Administration (SBA) loans are government-backed financing options designed to help small businesses access capital at favorable terms. The SBA does not lend directly; instead, it guarantees a portion of the loan made by approved lenders, reducing the risk for banks and enabling better rates and terms for borrowers.

SBA 7(a) Loans

The 7(a) program is the SBA's most popular and flexible loan program. Loans up to $5 million can be used for working capital, equipment purchases, real estate, business acquisitions, and debt refinancing. Terms range from 7 years for working capital to 25 years for real estate. Interest rates are typically tied to the prime rate plus a spread of 2.25% to 4.75%.

SBA 504 Loans

The 504 program is specifically designed for major fixed-asset purchases like commercial real estate and heavy equipment. These loans involve a three-party structure: a bank provides 50% of the financing, a Certified Development Company (CDC) provides up to 40% backed by the SBA, and the borrower puts down at least 10%. The CDC portion typically offers below-market, fixed-rate financing.

SBA Microloans

Microloans provide up to $50,000 for small businesses and certain not-for-profit childcare centers. The average microloan is about $13,000. These loans are distributed through nonprofit community-based organizations and are ideal for startups and very small businesses that need modest capital.

Understanding the SBA Guarantee Fee

The SBA charges a guarantee fee that is typically passed on to the borrower. For 7(a) loans, the fee ranges from 0% to 3.75% depending on the loan amount and term. This fee is a one-time upfront cost that increases your effective borrowing cost, which is why the effective APR is higher than the stated interest rate.

Eligibility Requirements

• Must be a for-profit business operating in the United States
• Owner must have invested equity (skin in the game)
• Must demonstrate ability to repay from business cash flow
• Good personal credit (typically 680+ for best terms)
• Cannot have access to other reasonable financing