Types of SBA Loans

There are many SBA loans and many programs. Here are the main ones:

7(a) Loan. This is the basic, mainstay SBA loan program. The 7(a) loans can be used for all sorts of things—startups, working capital, equipment, furniture, and even real estate. The length of the loan can be anywhere from 10 to 25 years, and loan amounts have recently been raised to $5 million.

Microloan Program. As opposed to the rest of the world where a microloan is typically for a few hundred dollars, microloans in the United States (at least SBA microloans) can be for as much as $50,000. Money here can be used for working capital or for the purchase of furniture, supplies, inventory, fixtures, or equipment. You cannot buy real estate with microloans. In the case of a microloan, the funds are typically distributed through nonprofit, community-based lenders (as opposed to larger financial institutions).

How much does the SBA guarantee? Traditionally, SBA loan guarantees worked this way:

  • Loans up to $50,000: SBA guarantees 50 percent of the loan.
  • Loans up to $150,000: SBA guarantees 85 percent of the loan.
  • Loans above $150,000: SBA guarantees 75 percent of the loan.

A big change resulting from the 2009 stimulus law is that the SBA now has the right to guarantee up to 90 percent of all loans. Sometimes the SBA does in fact guarantee that much, but not always. As they say, “your results may vary.”

Certified Development Company (CDC)/504 Loan Program. The CDC/504 loan program offers long-term, ...

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