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Quick Introduction to SBA 7(a) Loans

What is an SBA 7(a) loan?

The SBA 7(a) loan provides small businesses with up to $5 million and is partially guaranteed by the Small Business Administration (SBA). The SBA 7(a) loan program is the most popular of all the SBA loan programs because the proceeds can be used for a wide range of business purposes, such as working capital, expansion, and equipment purchases.

How it Works

For loans up to $150,000, the SBA will guarantee up to 85% of the loan and for loans greater than $150,000, up to 75% of the loan will be guaranteed. Because this partial guarantee by the SBA lowers the risks for lenders, small businesses will benefit from better loan terms

7(a) Loan Types

There are multiple types of the 7(a) loan, differing in maximum cash amount, processing time, and what their funds can be used for.

1. Standard 7(a) Loan

The standard 7(a) loan has a maximum cash amount of $5 million and can be used for general business purposes such as working capital or expansion. The turnaround time is typically 5-10 days.

For loans under $25,000, lenders do not need to take collateral. For loans above $350,000, lenders must follow the collateral policies and procedures that are used for similarly-sized non-SBA-guaranteed loans.

2. SBA 7(a) Small Loan

The 7(a) small loans are nearly identical to the standard 7(a) loan, but the maximum loan amount is $350,000. The benefit of a 7(a) small loan is that the SBA will pre-screen your application to determine if your business is an easy approval. If you pass, your application will be fast-tracked.

3. SBA Express Loan

The SBA Express loan offers up to $350,000 and is designed for giving applicants a quicker turnaround time, usually within 36 hours. While the application processing is much quicker, the SBA will guarantee only 50% of the loan.

4. Export Express Loan

The Export Express loan also has a quick turnaround time of 36 hours. The loan amount can go up to $500,000 and the SBA may guarantee up to 90% of the loan. As the loan’s name suggests, the Export Express loan can only be obtained by small export businesses.

5. Export Working Capital

The Export Working Capital is a 7(a) loan that can provide up to $5 million to export companies that need additional working capital. The SBA will guarantee up to 90% of the loan, with the standard turnaround time of 5-10 business days. The SBA requires lenders to take all export-related inventory and export sale receivables as collateral.

6. International Trade Loans

International Trade loans are long-term loans designed to help small businesses compete in international markets. The SBA guarantee can go up to 90% and the standard turnaround time of 5-10 days still applies.

7. SBA CAPLines

SBA CapLines comprise of 4 types of SBA lines of credit of up to $5 million. The SBA directs these lines of credits towards businesses with cyclical gaps in cash flow with terms that range from 5-10 years.

Loan Term Lengths

The repayment term on an SBA 7(a) loan depends on the kind of funding provided. Real estate can have a maximum term of 25 years, whereas working capital instead has a maximum of 7 years.

While the specific repayment schedule differs between lenders, the typical payment schedule for a 7(a) loan is monthly payments.


The criteria for qualifying for a 7(a) loan, as stated on the SBA website, are:

• A Good Personal Credit Score

• Consistent Business Revenue and Profitability

• A Debt Service Coverage Ratio of at least 1.15

• A Business Plan for Future Financial Projections

• Demonstrating Understanding of the Market and Competitors

• Collateral of Valuable Assets

You must also meet the following basic requirements:

• Your business is officially registered as a for-profit business.

• Your business meets the SBA’s definition of a small business.

• Your business is in and operates in the US.

• You, as the business owner, have invested your own time and/or money into the business.

• Sufficient time in business


Low Interest Rates: SBA loans have one of the lowest interest rates of financing options, and can never exceed the maximum rate set forth by the SBA.

Long Repayment Terms: Repayment for SBA loans also takes over the course of several years and monthly payments are more manageable to handle.

Less Stringent Collateral Requirements: Since lenders do not even need collateral at lower drawn amounts, applications are not denied only because a company has no assets to offer as collateral.


The SBA 7(a) loan terms offer a high degree of flexibility with minimal costs. If your business needs a loan and you believe you can qualify for a 7(a) loan, it will be one of the most effective financing options.


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