featured
2026-09-22
Business
published
Steve Filmer, Senior Vice President, Director of Government Guaranteed Lending
Small business owners and entrepreneurs looking to start or grow their business have long had a resource in the U.S. Small Business Administration (SBA) to help them access the capital they need.
What is an SBA 7(a) loan?
SBA 7(a) loans have always presented significant advantages for those businesses that qualify. Loans can be used for most business purposes, including purchasing real estate, buying an existing business, covering construction costs and bolstering working capital.
Effective July 4, 2026, qualified borrowers may combine up to $5 million in 7(a) financing with up to $5 million in 504 financing, providing access to as much as $10 million in total SBA-backed funding.
There are many traditional advantages of SBA loans, including:
Lower equity injection requirements. SBA loans have lower equity injection requirements than traditional bank loans, typically 10% of project cost.
Operating history vs. projected profitability. SBA loans allow lenders to underwrite based on business projections, which means business owners can obtain capital for initial businesses based on profitability estimates rather than operating history. This advantage is especially useful if the borrower has outside income and/or collateral to support the loan.
Partial guarantee to lenders. SBA loans provide a partial guarantee to lenders on loans made through the SBA 7(a) program. The partial guarantee offered by the SBA helps mitigate some risk associated with the transaction.
Generous term lengths. SBA loans provide generous term lengths, including up to 10 years on loans for non-real estate purposes and up to 25 years where more than 50% of the use of funds are centered on real estate.
Capped interest rates. SBA loans cap interest rates and have a cap of 3% over the prime rate on loans for more than $50,000 with terms over seven years.
Generous financing. SBA loans provide financing for up to 90% of project costs.
Quick turnaround (with an experienced bank). SBA loans allow for a 30- to 45-day turnaround from the receipt of a full underwriting package. With an experienced bank, an SBA product can take the same length of time to close as a conventional loan.
Advice for potential borrowers
The SBA standard operating procedure is over 400 pages long and extremely detailed. When interviewing an SBA lender, loan applicants should have a list of questions specific to their business and their request. The last thing anyone wants is to start the process and then be told later that their application does not qualify under the SBA rules for whatever reason.
An experienced SBA lender can be a great advocate for a business owner seeking a loan on two levels:
1. When seeking approval from the bank where he or she works — because any loan request must be approved by that bank; and
2. When seeking approval from the SBA.
What should you ask an SBA lender before applying?
SBA requirements are detailed. Before beginning an application, discuss your business and proposed transaction with the lender. Useful questions include:
- Which loan program best fits my needs?
- Does my business and proposed use of funds qualify?
- How much equity must I contribute?
- What financial statements and projections will you need?
- What collateral and personal guarantees are required?
- What are the interest rate, fees and potential prepayment costs?
- What could affect approval or delay closing?
Talk with Craft Bank about business financing in Atlanta
When applying for a commercial loan in general — whether an SBA loan or other loan — it is imperative to establish a good working relationship with your banker, the basis of which must be confidence, comfort and trust. If you do not have that relationship, keep “shopping.” It is important to find a bank that will work with you to craft a customized solution for your specific business needs. Lending starts with understanding.