SBA Loans

These are government-guaranteed long-term loans. The guarantee allows SBA lenders to offer low-interest rate loans to business owners who might not readily qualify for a bank loan.

Maximum Loan Amount




5-25 Years


Interest Rates

Starting at 6.75%



As quickly as 3 weeks


Learn More

What is an SBA Loan?

The U.S. Small Business Administration helps small business owners attain funding through SBA loans. With their multi SBA funding programs, this government agency provides SBA loan guarantees of up to 85% of the loan amount provided through an SBA-approved lender. There are three main SBA loan programs that let you borrow money for basically any business purpose—including working capital, purchasing inventory or equipment, refinancing other debts, or buying real estate—through these SBA-guaranteed loans.



  • Lowest down payments
  • Longest payment terms
  • Reasonable interest rates
  • Suitable for a wide range of business purposes


  • Lengthy paperwork
  • Longer approval times
  • May require collateral


Who Qualifies

Securing an SBA loan is no easy task

How can you get one?

The fact is, many businesses—including small or newer ones—can qualify for an SBA loan. The most important factor will be your credit score: SBA loans are for business owners with strong borrowing histories.

Be prepared: SBA loans will require a lot of time, energy, attention, and documentation.

Don’t believe any lender who promises to provide SBA loans today, that’s not possible: It’s definitely not a loan that you’ll apply to and receive the funding for even within a few days. That said, SBA loans are certainly right for growing your business and refinancing your other debt at the lowest available rates.

You might find it difficult to qualify for an SBA loan if your company has a limited track record or, especially, if your credit is poor. After all, the SBA and your lender are sticking their neck out on the belief that you’re a reliable borrower.


Most customers who were approved had

Annual Revenue: 

Over $180K

Credit Score:


Time in Business:

Over 4 years


How to Apply

You will find there are many large and local banks that offer SBA loans. These bank lenders will have extensive loan applications, closely examining all the financial details of your business. At a minimum, an SBA loan application at a traditional bank will take a couple of weeks to process.

For an easier and quicker process, you can apply online to top SBA lenders like Celtic Bank and Live Oak Bank.

You Will Need These Documents:

  • Driver’s License
  • Voided Business Check
  • Bank Statements
  • Balance Sheet
  • Profit & Loss Statements
  • Business Tax Returns
  • Personal Tax Returns
  • Business Plan
  • Business Debt Schedule


How Does an SBA Loan Work?

Almost every small business owner wants to know how to qualify for an SBA loan. As one of the lowest-cost products out there, SBA loans are the prime objective when it comes to growing your business affordably.

They’re impossible to get approved for, right?

At Common Funding, we’ve helped literally thousands of small business owners successfully secure SBA loans. With all that experience—and data—at our fingertips, we know we can give you all the information you need to apply for an SBA loan.

By understanding how the product works and what exactly the eligibility requirements are, you’ll know if an SBA loan is the right product for your business.


The Fundamentals

The “SBA” in SBA loans stands for the Small Business Administration.

The Small Business Administration is a federal agency dedicated to helping entrepreneurs improve their small businesses, take advantage of contracting opportunities, and get better access to small business loans. The last point will be our focus here.

The most common misconception about SBA loans is that the agency lends money to businesses.

But actually, that’s not the case—the SBA doesn’t directly lend money to businesses. So what is an “SBA loan” if not a loan coming from the SBA?

SBA loans are bank loans that are guaranteed by the SBA.

The SBA uses federal money to guarantee a percentage of loans administered by traditional banks, so those financial institutions have higher incentive to lend money to small businesses.

In simplest terms, the SBA backs up a portion of the bank’s small business loan, meaning less risk for lenders. And less risk for lenders translates to more small business owners being considered for the traditional longer-term, lower-rate financing that comes from banks.

Because of this guarantee, bankers are more inclined to lend you money even if you don’t fit their strict credit criteria. They can service a whole different set of customers than they usually would—without making too many sacrifices.


Applying for an SBA loan

While SBA loans are slightly easier to qualify for than traditional bank loans, remember: you’re still working with a bank in the end. And banks are famously slow.

At plenty of major banks, getting an SBA loan can still be a lengthy, complicated process. Lenders will want to review your credit and financial statements, and could expect you to have collateral to secure the loan. They’ll also look at a set of other documents—from legal documents, to business plans.

Even with the government guarantee, many small businesses don’t end up qualifying for SBA loans. If they do, the process could still take months.

Despite the time, an SBA loan’s low interest rates and long repayment terms are certainly well worth the wait.

What is the actual application like? Here’s the arrangement:

When applying for SBA financing, you will be required to complete an extensive loan application. You’ll be asked to provide documents like financial statements, information on your collateral, a description of your business, and a statement of how you’ll use the loan proceeds, among others.

The participating bank will look for applicants with great credit, a solid business plan, and a demonstrated ability to repay the loan.

Your borrowing history is extremely important to the bank you’re working with for an SBA loan.

Get the right SBA loan program for your business needs.

There are many different types of SBA loans out there, these 3 programs are the most popular:

  • The 7(a) Loan Program
  • The Microloan Program
  • The CDC/504 Loan Program

Which one is right for you?

The SBA loan program you’ll want to apply for depends on the size, age, and goals of your business.

The most popular program is the SBA 7(a) loan, which works best for businesses with general financing needs— such as expanding working capital, refinancing old debt, or renovating a location. Here are the details of an SBA 7(a) loan:

  • Up to $5M in loan amount
  • Repayment terms of up to 7 years (for working capital loans) or up to 25 years (for commercial real estate loans)
  • For general business financing needs

The CDC/504 loan is another popular program, but slightly more specific: A CDC/504 loan is used to purchase major fixed assets—including large equipment and commercial real estate. Here are the details of a CDC/504 loan:

  • Up to $5.5M in loan amount
  • Repayment terms of 10 or 20 years
  • For the purchase of major fixed assets

The third popular SBA loan program is the Microloan program. The SBA offers microloans to small or newer businesses searching for loans under $50K. These are the details of SBA microloans:

  • Up to $50K in loan amount
  • Repayment terms of up to 6 years
  • For starting or expanding a small or newer business

If you’re still feeling unsure about which SBA loan makes sense, Common Funding can walk you through the options and help you pinpoint which program is right for you—and whether you’ll qualify.

If you’re not ready to qualify yet, we’ll work with you to advance your business up to an SBA loan—one of the longest-term and most affordable business loan options out there.


What will an SBA Loan Cost?

The cost and repayment of your SBA loan depends on the program you choose. Here are the fees, interest rates, and repayment terms associated with each of SBA’s most popular loan programs.

7(a) SBA Loan Program


A guarantee fee of 0 – 3.5%, based on your loan’s maturity and the dollar amount guaranteed, might be included in the total cost of the loan.

(Remember: the SBA is not lending to you directly—and it does not guarantee 100% of the bank’s loan. This is why “dollar amount guaranteed” is different from “total loan amount.”)

The SBA charges a guarantee fee for the service of guaranteeing the loan. The lender originally pays the guarantee fee, but it also can pass that expense on to the borrower. These fees range from 0% for loans under $150K and up to 3.5% on loans of more than $700K. (There’s also an additional fee of 0.25% on any guaranteed portion of more than $1 million.)

Some partnered banks might also charge an origination fee or a loan packaging fee, depending on the bank or banks you’re working with.

While the fees seem to make up a fair amount of money, these fees are really nothing compared to the amount of money you’re saving by taking on an SBA loan instead of something smaller, faster, and more expensive.


Interest Rates

Maximum of 2.75% + Prime Rate (typically between 5 – 10%).

7(a) SBA loans come with interest rates in either fixed or variable (typically adjusted quarterly) varieties. Your bank lender determines which it will offer.

To protect borrowers, the SBA puts a ceiling on 7(a) loan rates by limiting the “spread” a bank is allowed to apply on top of the loan’s base interest rate.

Simply stated, the SBA restricts how much a bank can make off your SBA loan.

If your loan term is less than 7 years, the maximum spread will be at most 2.25%. For longer loans, that spread increases to 2.75%.

With the current Prime Rate added on, you’re likely to end up paying a rate between 6% and 13%.

Like all types of loans, the interest rate you end up paying depends on your credit score and the length of your repayment term.



Up to 7 years for working capital loans, 10 years for equipment loans, and 25 years for commercial real estate loans.

What will a 7(a) SBA loan mean for your business’s cash flow? You can expect monthly payments for 25 years for real estate, 10 years for equipment, and generally up to 7 years for working capital.

Keep in mind: these are the longest terms you’ll find, giving you plenty of time to decide how to make each payment and spreading those large loan amounts over many years.


CDC/504 SBA Loan Program


CDC / 504 SBA loan fees are usually about 3 % of the loan amount—and can sometimes be financed with the loan.

Also, be aware that you’ll need to put roughly 10% of your purchase down to secure 504 SBA financing.



Typically 5 – 6 %.

The SBA’s 504 loan program is one of the most complicated financing products out there.

Here’s the basics the short and long of it.

The short: You can probably expect an interest rate of 5 – 6% on your loan. However, you won’t know the exact rate until roughly 45 days after the fact.

The long: The 504 loan program involves two individual loans—one from a bank (which is 50% of the loan) and one facilitated by a Certified Development Corporation (which is usually 40% of the loan). The latter gets grouped together when all CDCs pool their projects, and through underwriters, auction the pool to investors.

That means you don’t get to know the exact rate until the sale of the pool, which is approximately 45 days after you’ve closed with the CDC.

However, historically speaking, you’re pretty set for a pool rate between 4 – 5%. When blended with your bank rate, the total should come out to around 5 – 6%.

It’s complicated, but there’s really no point in worrying: it all gets handled automatically.



Maturity terms of 10 and 20 years with the 504 SBA loan program.


Microloan Program



There are no fees associated with microloans.



Rates range over 8 – 13 % for the microloan program.

Microloans are administered by partnering financial institutions. The institution you work with is the one that sets the interest rate on the microloan, depending on your creditworthiness and the specifics of your small business.

You can expect an interest rate of 8 – 13% on all microloans.



Up to 6 years with monthly repayments.

Loan repayment terms depend on the loan amount, use of funding, and other criteria, but the maximum repayment term allowed for an SBA microloan is 6 years.

As for the repayment schedule: like with other SBA loans, you can expect monthly charges.