What You Need to Do to Get an SBA Loan
An SBA loan starts with a bank or credit union, not the Small Business Administration itself. The SBA doesn't lend money directly — it guarantees loans that private lenders make to small businesses. You'll explore to a lender (usually a bank), the lender reviews your business and finances, and if approved, the SBA backs a portion of the loan so the lender takes less risk.
The process typically takes four to eight weeks from process to funding, though it can be faster or slower depending on how complete your paperwork is and how busy the lender is. You'll need to show the lender that your business can repay the loan and that you have "skin in the game" — usually meaning you've invested your own money into the business first.
Key Takeaways
- SBA loans come from banks and credit unions, not from the SBA directly, though the SBA guarantees the loan so the lender takes less risk.
- You must have a business plan, personal financial statements, tax returns, and proof of how much of your own money you've invested in the business.
- The most common SBA loan is the 7(a) loan, which can be used for working capital, equipment, real estate, or debt refinancing.
- Your personal credit score and business credit history matter — most lenders want to see a score of 680 or higher, though some will go lower.
- You'll need to find a lender that offers SBA loans; not all banks do, so calling ahead to confirm saves time.
Gather Your Financial Documents Before You explore
Lenders will ask for the same documents whether you're explore for an SBA loan or a conventional business loan. Start by collecting your personal tax returns for the last two years and your business tax returns for the same period. If your business is brand new and hasn't filed tax returns yet, you'll need a detailed business plan and a personal financial statement instead.
You'll also need a current balance sheet and profit-and-loss statement for your business. If you're using the loan to buy equipment or real estate, get quotes or appraisals showing what you're buying and what it costs. Bring proof of how much of your own money you've put into the business — bank statements, investment records, or documentation of equipment you've already purchased.
Have your business license, articles of incorporation (if you're a corporation or LLC), and a list of all business debts ready. The lender will also want to know who owns the business and what percentage each owner holds. If you're buying an existing business, bring the seller's financial statements and tax returns for the last three years.
Choose the Right SBA Loan Type for Your Purpose
The 7(a) loan is the most common SBA loan and can be used for almost anything a small business needs: working capital, inventory, equipment, vehicles, real estate, or paying off other business debts. Loan amounts range up to $5 million, though most are smaller. The SBA guarantees up to 90 percent of the loan, meaning the lender covers the first 10 percent of any loss if you default.
The 504 loan is designed specifically for buying real estate or large equipment. It's structured as two loans: the SBA-backed portion (up to $5.5 million depending on the project) and a conventional loan from a bank. This type is slower to close than a 7(a) loan but often has better terms for real estate purchases.
The Microloan program lends up to $50,000 to very small businesses or startups that can't get conventional financing. These loans come through nonprofit lenders, not banks, and often include business training. The tradeoff is a shorter repayment period and higher interest rates than larger SBA loans.
Find a Lender That Offers SBA Loans
Not every bank offers SBA loans, so start by calling banks where you have a relationship — your current bank is more likely to work with you than a stranger. Ask specifically whether they offer SBA 7(a) loans and whether they're currently taking applications. Some banks pause SBA lending during busy periods or focus only on certain loan sizes.
If your current bank doesn't offer SBA loans, the SBA's website has a lender directory where you can search by state and loan type. You can also contact your local Small Business Development Center (SBDC) or SCORE chapter — both are free resources that help small business owners and can point you to lenders in your area who are actively lending.
When you call a lender, ask about their minimum credit score requirement, how long the process takes, and what documents they need upfront. Some lenders will do a quick pre-qualification call to see whether your business is a fit before you spend time gathering paperwork. This conversation costs nothing and can save you weeks if the lender tells you they won't work with your industry or loan size.
Complete the SBA Loan process
The lender will give you Form 1919 (the SBA Loan process Form) and their own process. The SBA form asks for basic information about your business, its ownership, how you'll use the loan money, and what collateral you're offering to find it. You'll also complete a personal financial statement (Form 413) for each owner with 20 percent or more of the business.
The lender's process asks similar questions but in their own format and may ask for additional information specific to their underwriting process. Be thorough and honest — lenders verify everything. If you say your business made $100,000 last year, they'll check your tax returns. If you claim you have no other debts, they'll run a credit report.
Submit all documents at once if possible. Lenders move faster when they don't have to chase you for missing pieces. If you're missing something, ask the lender what they absolutely need to start the review and what can come later. Some documents (like a final appraisal on real estate) may not be ready yet, and the lender can tell you when they need it.
Understand What Happens During the Review
Once you submit your process, the lender's underwriter reviews your business plan, finances, and credit history. They're asking three questions: Can the business repay the loan from its cash flow? If not, do you have personal assets to fall back on? And is the collateral you're offering worth enough to cover the loan if you default?
The lender will pull your personal credit report and may check your business credit if you have a business credit file. They'll also verify your income by contacting your employer or reviewing your tax returns. If you're buying real estate or equipment, they'll order an appraisal to confirm the value matches what you're paying.
During this time, the lender may ask follow-up questions or request additional documents. Respond quickly — delays here slow down the whole timeline. If the lender asks why you had a late payment five years ago or why your business had a loss one year, have a straightforward explanation ready.
Close the Loan and Receive Funding
If the lender approves your loan, they'll send you a loan agreement spelling out the interest rate, repayment term, monthly payment amount, and any conditions you must meet before funding. Read this carefully. The interest rate on SBA loans varies by lender and loan type but is typically prime plus 2.25 to 2.75 percent for a 7(a) loan.
You'll sign the loan documents in front of a notary, and the lender will order a title search (if real estate is involved) and finalize any insurance requirements. For most loans, you'll need to carry business liability insurance and, if you're borrowing against real estate or equipment, the lender will require that asset to be insured as well.
Once everything is signed and conditions are met, the lender will fund the loan — usually by wire transfer to your business account or directly to a seller if you're buying something. The SBA doesn't participate in closing; the lender handles all of it. From approval to funding typically takes one to three weeks, depending on how quickly you and the lender complete the final steps.
Frequently Asked Questions
What credit score do I need for an SBA loan?
Most lenders want to see a personal credit score of 680 or higher, though some will work with scores as low as 640. Your business credit history (if you have one) also matters. If your score is below 680, you can still look for lenders, but you may face higher interest rates or be asked to put down a larger personal investment in the business.
How much of my own money do I need to invest in the business?
The SBA typically expects you to have invested at least 20 to 30 percent of the total project cost with your own money. If you're borrowing $100,000, the lender usually wants to see that you've already put in $25,000 to $30,000 of your own funds. This shows the lender you're committed and have skin in the game.
Can I get an SBA loan if my business is brand new?
Yes, but it's harder. New businesses don't have tax returns or a track record, so lenders rely heavily on your personal credit, your business plan, and how much of your own money you're investing. You'll need a detailed plan showing how you'll use the money and how the business will generate revenue to repay the loan.
What can I use an SBA loan for?
A 7(a) loan can be used for working capital, inventory, equipment, vehicles, real estate, or refinancing existing business debt. You cannot use it for personal expenses, to pay off personal debt, or to invest in stocks or other securities. The lender will ask you to describe exactly how you'll use the money, and the funds are typically released only for the stated purpose.
How long does it take to get an SBA loan?
The timeline is usually four to eight weeks from process to funding, though it can be faster if your paperwork is complete and your situation is straightforward, or slower if the lender needs additional information or if real estate appraisals take time. Having all your documents ready upfront is the single biggest factor in speeding up the process.