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Starting a new business can be an exciting journey, but it also comes with its own set of challenges. One of the biggest hurdles can be securing the right funding to get your startup off the ground. As a small business owner with poor credit, it can be even more difficult to find the financing you need. However, there are still options available to you. In this article, we’ll explore the possibilities of getting a startup business loan with no credit check or poor credit, as well as alternative forms of financing to consider.

Getting a business loan with no credit.

When you apply for a business loan, many commercial lenders will review your credit history to get a sense of how you’ve handled debt in the past. Reviewing previous credit history and checking your credit scores helps lenders predict risk. The problem for many entrepreneurs is that their new business hasn’t yet had a chance to establish a track record when it comes to managing credit obligations. 

If a lender’s usual qualification metrics are based on longevity (aka time in business and length of credit history), they need to take a different approach for startups. Rather than look at business credit, a lender may focus on your personal credit score and overall business experience instead. 

This alternative approach to risk assessment can work because a business owner’s personal credit scores can also provide a lender with valuable predictive analytics. At its core, a credit score (both business and personal) is a formula that lenders use to predict whether you’ll repay the money you borrow as promised. And that key information—the likelihood of repayment—is what a lender really wants to know when you apply for a loan.

The best small business loans with no credit check.

There are many loan products available to small business owners. Yet entrepreneurs with low credit scores or those who prefer to avoid a credit check for other reasons often find the most success with invoice factoring, ACH loans, or business lines of credit. 

The qualification criteria for the three financing options above depend less on your credit scores and more on other factors. This doesn’t mean you will receive an automatic approval even with a very poor credit score. But if you have experience in your industry and some positive credit history, you may have a fighting chance at qualifying.

Below are some important details to consider regarding these three financing options:

1. Invoice factoring

With invoice factoring, the majority of lenders do not have a minimum credit score requirement. As a result, your application for funding from a factoring company may not involve a credit check at all. Here’s an overview of how this financing option works. 

Invoice factoring involves selling your company’s outstanding B2B invoices to a financing company for cash. In general, a factoring company might advance you 70% to 90% of the value of your invoices. The factoring company then works directly with your client to collect the money owed when the invoice due date arrives. Once it collects the funds, the factoring company will return the remaining balance to you, minus a factoring fee (often 3% to 5%).  

Lenders don’t typically check your credit when you’re seeking financing through an invoice factoring arrangement. Instead, the credit of your customers could matter. With this type of financing, a factoring company will collect payment from your customers, not you or your business. Therefore, your customer’s creditworthiness could impact your ability to qualify for financing and the fees a lender charges you as well. 

2. Revenue-based financing

Revenue-based financing (sometimes called a business or merchant cash advance) could be another financing solution to consider if you need business financing for bad credit or no credit. Most lenders that issue revenue-based financing require a minimum credit score of 500 to 625. (These lenders often perform only a soft credit inquiry that won’t impact your credit score.) However, a handful of providers may not require a credit score review at all. 

Revenue-based financing is so popular among entrepreneurs because of their rapid funding speed. Once a lender approves you, you can often receive your loan proceeds within a couple of days. This funding agility can present a substantial advantage for a small business in the startup phase.

Of course, just as with ultra-fast sports cars, you are likely to pay a premium for the speed of cash advances. On either a daily or weekly basis, the lender will take an agreed-upon amount from your bank account as an ACH deduction. The amount you can borrow tends to be lower than the loan amounts you might receive via other financing options. But many small business owners feel that the trade-off is fair, thanks to the convenience of revenue-based financing.

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3. Business lines of credit

Lenders are likely to review your credit when you apply for a business line of credit (LOC). However, some lenders will only perform a soft credit inquiry to assess your business LOC application. (Remember, soft credit inquiries do not have any impact on your credit score, unlike hard credit inquiries that have the potential to impact your credit score.) Other lenders may perform a soft credit check for the pre-approval process and follow up with a hard credit inquiry at the time of funding.

In some cases , when you apply for funding through a service provider you already use, they can make decisions based on the data already available.

When researching a business line of credit, you’ll notice it's similar to a business credit card in a few ways. An LOC comes with a credit limit, often ranging from $1,000 to $500,000. Depending on the lender, you may have access to the funds within one to two weeks. The financing typically has a one- to two-year maturity.

Perhaps the best feature of a business LOC is its flexibility. If your restaurant needs a new fryer, buy it. If you need to hire employees, go for it. If you want to bulk up your inventory, do it. Nearly any expense that goes toward starting and sustaining your business is fair game.

Like credit cards, this type of financing also gives you access to revolving credit. This differs from most loans, which provide you with a lump sum of money upfront. With an LOC, you simply use the credit line whenever necessary. There’s no pressure to spend it, and you’ll pay interest only on the funds your business borrows.

Work to bolster your credit score.

It’s true that invoice factoring, ACH loans, and sometimes even business lines of credit can provide financing even when your credit is unimpressive. But that’s no reason to accept the status quo. You should put effort into improving your credit. 

Working to earn better credit could open doors to you in the future. Not only can good credit help you qualify for more loan products, but it may also help you receive more favorable interest rates and repayment terms from lenders.

Paying credit obligations and vendor accounts on time is the best way to improve your business credit scores. (And, of course, you’ll want to make sure those accounts report to the credit reporting agencies.) 

To maintain a stellar payment history, sign up for automatic payments whenever possible. If you can’t sign up through the payee, consider adding them to your banking system. At the very least, set up a regular calendar reminder so you won’t be forced to rely solely on your memory.

Alternative financing options

1. Crowdfunding – Crowdfunding is a way to raise money online by collecting small amounts from numerous people. 

2. Family and Friends – Small business owners can borrow from family and friends, but there are risks. If the business fails or the loan can’t be repaid, important relationships may suffer. 

3. Grants – Small businesses and startups may find it appealing to apply for grants as they don't need to be repaid. Although challenging, winning a grant isn't impossible.

4. Angel Investors –An angel investor funds small businesses in exchange for equity. It's a good option when businesses need more funding than they can get from friends and family, but not enough to attract venture capitalists.

5. Venture Capitalists – Venture capitalists provide funding to startups and receive a percentage of the company’s equity in return. Venture capitalists are typically looking for businesses with high-growth potential and a solid business plan. 

Whether you’ve gone through a personal or business bankruptcy, lenders will consider past bankruptcies when making a loan decision. This post will cover common questions about bankruptcy and how it impacts your loan application.

Can you get a business loan after bankruptcy?

Yes, you can qualify for a business loan if you’ve had a bankruptcy. However, lenders will want to see that you’ve rebuilt your credit and will have varying waiting periods before you are eligible.

However, each platform will have rules about when you could have last had a bankruptcy, such as not within the last 24 months.

When can you qualify for a loan after bankruptcy?

Bankruptcy policy will vary by lender. Some will require waiting seven years when the bankruptcy will be removed from your credit report. Others will consider your application within two to three years after the bankruptcy is closed if you’ve rebuilt your credit score. Some lenders will disqualify you if you have had multiple bankruptcies.

Can you get an SBA loan after bankruptcy?

Yes, you can qualify for an SBA loan if you’ve had a previous bankruptcy. The policy will vary by lender but generally starts at no bankruptcies or foreclosures in the past three years with no more than two total bankruptcies. 

Types of bankruptcy.

Chapter 7 bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, involves the sale of a debtor's non-exempt assets by a trustee. The proceeds are used to pay off creditors. This type of bankruptcy is designed for individuals or businesses that don’t have the means to pay back their debts. For businesses, this usually means the end of operations. However, individuals might see it as a fresh start, albeit with a significant impact on their credit report for 10 years.

Chapter 11 bankruptcy

Chapter 11 bankruptcy is primarily for businesses, allowing them to continue operations while reorganizing their debts. It’s a complex process that involves negotiating with creditors to modify the terms of the debt without selling off assets. This form of bankruptcy can be expensive and time-consuming but offers businesses a chance to recover and eventually return to profitability.

Chapter 13 bankruptcy

Chapter 13 bankruptcy is aimed at individuals with a regular income who want to pay their debts but are currently unable to do so. It involves a repayment plan lasting three to five years, allowing debtors to keep their property while making more manageable monthly payments towards their debt. The successful completion of the payment plan can lead to the remaining debts being discharged. Chapter 13 bankruptcy remains on an individual's credit report for seven years, offering a less severe impact compared to Chapter 7.

Waiting periods

Typically, a bankruptcy will remain on your credit report for at least 7 years. However, because the court filings are public, the fact that you declared bankruptcy would remain part of the public record if someone searches for it.

Steps to qualify for a loan post-bankruptcy.

Rebuild your credit.

Rebuilding your credit after bankruptcy is crucial for qualifying for a business loan. It may seem daunting, but it's possible with a strategic approach:

Start by regularly checking your credit report for inaccuracies. Dispute any errors that can negatively impact your score.

Consider obtaining a secured credit card. This requires a deposit acting as your credit limit.

Make small purchases with this card and pay off the balance in full each month. This shows lenders your responsible credit use.

Always make payments on time, keep your credit utilization low, and be patient. Credit rebuilding takes time, but consistent effort will gradually improve your creditworthiness.

Research lenders.

Find out which lenders will work with business owners with a prior bankruptcy and the thresholds you'll need to meet before you apply.  If you apply through Lendio, we can help match you with lenders who will work with someone with your credit history.

Grow business income.

Lenders will also consider your business's current financial standing and future potential when evaluating your loan application. Focus on increasing revenue and building strong cash flow to demonstrate the ability to repay a loan.

Have you ever wondered why lenders pay such close attention to your credit score? It’s because they’re protecting their assets and want to determine whether they can trust you to consistently repay the money. If your credit score reflects a solid track record, you’ll get serious consideration. If you have major blemishes in your past, many lenders take defensive action.

Of course, we realize the life of an entrepreneur is full of risk. We’ve all collected our share of bumps and bruises along the way. So there’s no shame in a less-than-stellar credit score. And if you feel like your bad credit is keeping your business from achieving its potential, you’re not alone. However, don’t let one or two rejected loan applications keep you down. It is possible to get still business loans with bad credit.

Best business loans for bad credit.

The following list highlights lenders from our selection of best business loans that offer minimum credit requirements below 650 and have a lower minimum credit score requirement than their counterparts.

How a bad credit score impacts your business loan options.

Credit score requirements for business loans vary by lender and the type of loan. No credit requirements are the same, so you’ll always need to do your due diligence to find your best opportunities. This is especially true for bad credit loans online.

Traditional banks typically require good or excellent credit to qualify for a business loan. This means you should have a personal credit score of at least 670, although some banks will consider applicants with credit scores in the low 600s. If you’re applying for a long-term or SBA loan, banks may want to check your business credit score in addition to your personal credit score. In this case, you’ll want to have excellent business credit, as well—a Dun & Bradstreet score of 80 or above should suffice.

Where to find business loans for bad credit.

There’s still hope for business owners with bad credit. While big banks tend to offer the lowest interest rates, plenty of other affordable lenders out there offer bad credit loans online.

Service providers

As embedded financing unlocks new ways for business service providers and platforms to service their customers, financing options are now available in places you already frequent. From accounting software to e-commerce platforms, many tools you already use to run your business may offer access to capital directly within their interface—often with faster approvals and tailored options based on your business data.

Lending Marketplaces

Lending marketplaces have opened the door for a new range of business owners to access business loans. These marketplaces are home to a wide range of lenders and leverage technology to connect borrowers with a loan that suits their needs and credit profile.

Loans from these lending marketplaces have a much higher approval rate than those from traditional banks. They also tend to be much easier to apply for, and you’ll often receive funding very quickly. This makes them an ideal source of loans for people with bad credit.

Microloans

Microloans are exactly what they sound like⁠—small loans. These loans are geared toward entrepreneurs and are, therefore, easier to qualify for than traditional loans. 

No credit? That’s not necessarily going to be a roadblock. Your microloan will typically be fulfilled by several lenders pooling their money together, so each lender can spread their risk among many different small loans. This feature makes peer-to-peer lenders more willing to lend to people with bad credit. However, if you don’t have good credit, you will end up paying higher interest rates.

CDFIs

Community Development Financial Institutions (CDFIs) are non-profit or community-based financial institutions that offer loans to individuals and businesses in underserved communities. These institutions prioritize helping those who have historically been denied access to traditional financing options, which often includes business owners with bad credit.

CDFIs typically perform a more holistic evaluation of an applicant's creditworthiness, considering factors such as their character, community involvement, and potential for success. This approach to lending has made CDFIs a popular choice for business owners with bad credit.

Some examples of CDFIs include Accion and the Opportunity Fund. You can find more information about CDFIs through the CDFI Fund.

Types of loans for bad credit.

It’s important to know how to get a business loan if your credit isn’t in a great place. And there is a trio of financing products that often fit the bill perfectly. These loans for bad credit options are different from typical loans both in their structure and their low barrier to entry.

Let’s review each of the types of loans for bad credit and some of their unique attributes:

1. Business lines of credit 

A business line of credit is a financing option that functions a lot like a credit card. To qualify, you’ll need to have a credit score of 600 or higher, have a business that’s been operating for at least six months, and make $50,000 or more a year.

2. Business cash advance

A business cash advance is a strong choice for business owners with bad credit because the financing eligibility is primarily based on the company’s revenue and other financials. The approval process is typically fast, so it’s also good for companies that need immediate access to capital. Lenders usually require daily payments that are automatically debited from your business account. In addition to the principal balance, you’ll also pay a factor rate. Your daily payments are usually calculated as a fixed percentage of that day’s sales, which can help you avoid overleveraging your business.

3. Invoice factoring

Lenders who offer invoice factoring focus on your business’ future earnings based on your current accounts receivables, so most lenders won’t look at your credit score. Some will have other minimum requirements, such as time in business and monthly revenue. Most lenders will also have limitations on the industries with which they will work, with some specializing in e-commerce and others focused solely on B2B or B2G brands.

4. Equipment financing

Equipment financing helps you finance specific purchases, whether it’s a piece of heavy machinery or software to help run your company more efficiently. In the case of equipment leasing, the purchased asset is used as collateral, which helps to widen eligibility requirements and keep interest rates lower than with many other options. 

Most lenders have a one-year minimum time in business requirement, as well as a minimum annual revenue. A personal credit score is required, but minimums start in the 500’s.

Boosting your odds of qualifying for a business loan despite bad credit.

It's not just about finding the right lender—you also have to make yourself more appealing to them. Here are a few strategies to consider:

Improve your credit score - It’s easier said than done, but the most reliable way to make yourself attractive to lenders is by fixing your credit. Pay off outstanding debts, make sure you’re making all your current payments on time, and check your credit report for errors.

Offer collateral - If you can provide assets that the lender can seize in case you default on your loan, they may be more willing to work with you. These assets could be equipment, real estate, or other business properties.

Find a co-signer - If someone with a better credit score is willing to co-sign for your loan, that can greatly increase your chances of approval. However, remember that this person will be responsible for your loan if you can't make the payments.

Increase your cash flow - Lenders want to see that you'll be able to pay back the loan. If you can show that your business has a steady cash flow, you're more likely to secure the loan.

Build a strong business plan - As mentioned earlier, a solid business plan can go a long way. It shows that you're serious about your business, and it gives the lender confidence in your likelihood of success.

By following these steps, you can improve your chances of being approved for a business loan, even with bad credit. Remember, bad credit isn't a death sentence. It’s just a hurdle to overcome—and with the right approach, you can do it.

How to improve your credit score.

Improving your credit score takes time and effort, but it is worth it in the long run. Here are some steps you can take to improve your credit score:

Pay off outstanding debts - Focus on paying off any outstanding debts as soon as possible. This will not only improve your credit score, but also save you money in interest.

Make your payments on time - Late payments can significantly impact your credit score. Make sure you are making all of your payments on time, whether it's for a loan, credit card, or bill.

Monitor your credit report - Regularly check your credit report for any errors or discrepancies. If you find any, dispute them with the credit bureau to have them corrected.

Reduce your credit utilization - Your credit utilization ratio is the amount of available credit you're using. Aim to keep this below 30%, as it could positively impact your credit score.

Don't apply for too many new lines of credit - Each time you apply for a new loan or line of credit, it results in a hard inquiry on your credit report. Too many of these can negatively impact your score.

In conclusion, having a bad credit score isn't a dead end for business owners. There are several avenues available (Ex: lending marketplaces, microloans, and CDFIs) that are designed to help businesses with less-than-stellar credit histories. Compare small business loans from multiple lenders with a single application through Lendio.

In today’s fast-paced, mobile-first world, it’s essential for businesses to prioritize customer convenience. Embedded finance is one creative (and often profitable) way that companies can accomplish this goal. With embedded finance features, non-financial companies can offer key services—like credit and banking products—while customers are already at the point of sale.

Whether a person is buying a pair of sneakers online or hailing a ride on their smartphone, consumers have grown to expect seamless financial transactions right where they’re located. And embedded finance is how many businesses—especially those that don’t sell financial products—are providing these services. 

Embedded finance helps non-financial companies offer services like payments, lending, insurance, and banking directly through their own platforms. Understanding this technology can help your business improve customer satisfaction, unlock new revenue streams, and stand out in the digital marketplace.

Understanding embedded finance

Embedded finance refers to the integration of digital banking and financial products or services into a non-financial company’s platform or mobile app. More plainly, it means offering financial products—like credit, payments, or insurance—to customers right when and where they need them.

From a customer perspective, embedded finance provides added convenience and, in some cases, access to a financial product they might not find easily on their own. Meanwhile, for B2B platforms, retailers, and other businesses, embedding financial capabilities can unlock cross-selling opportunities while enhancing customer satisfaction and brand loyalty.

How does embedded finance work?

At its core, embedded finance is powered through APIs (application programming interfaces) and banking-as-a-service (BaaS) platforms. These services give non-banks the capability to “plug in” financial tools into their existing platforms without the burden of maintaining their own financial institution charters. When customers use these embedded services, they never leave the familiar platform where they initiated their original purchase. Behind the scenes, however, licensed financial institutions or third-party fintechs are powering the transactions and services.

Here are a few real-life examples of embedded finance in action.  

• A retailer integrates BNPL (Buy Now, Pay Later) services like Afterpay or Klarna into its platform or mobile app.
• A department store offers a branded retail store credit card featuring discounts, rewards, and other benefits. 
• Lyft drivers use embedded banking services (including an in-app checking account and debit card) to access instant earnings, manage funds, and request cash advances.
• Starbucks customers use the brand’s mobile app to store their credit or debit card information for one-tap payments while earning loyalty rewards. 

By embedding financial services directly into their platforms, companies can offer more convenient, personalized, and stickier user experiences. And this trend is only gaining momentum. Experts predict the global embedded finance market will reach $7.2 trillion by 2030, according to Harvard Kennedy School.

Difference between embedded finance and fintech

At first glance, the terms “embedded finance” and “fintech” may sound interchangeable. But there are key differences that are important to understand. 

• Fintech refers to companies that develop financial technologies for consumers and businesses including tools for payments, budgeting, investing, lending, and more. Examples of fintechs include Stripe, Plaid, and Robinhood, among others. 
• Embedded finance is the integration of financial technologies into non-financial platforms through APIs. It refers to the financial service, not the developer.

In short, most embedded finance capabilities wouldn’t be possible without the fintech companies that develop and maintain the technologies. And fintech partnerships can help solve regulatory hurdles for non-financial companies that wish to offer embedded finance products as well.It’s also important to understand how BaaS (banking-as-a-service) providers fit into this landscape. BaaS allows regulated financial institutions to deliver services through non-bank businesses. For example, when Uber (a non-bank) offers debit cards to drivers, it partners with a regulated banking partner like Branch as a BaaS provider to deliver those services.

4 Types of embedded finance (with examples)

1. Embedded banking

Embedded banking brings banking functionality into non-bank platforms. Key features may include account creation, debit card access, deposits, money transfers, and more.

Examples of embedded banking include: 

• Shopify Balance offers merchants a business account, debit card, and rewards for eligible business-related purchases—all without leaving the Shopify system.‍
• Lyft Direct business debit card and banking app provides drivers with instant access to earnings, cash back, and other perks. These benefits reduce driver incentives to switch to competitors.

2. Embedded payments

Embedded payments are perhaps the most common example of embedded finance. This technology lets customers pay within an app or platform without being redirected to an external site (and without having to pull out their wallet to re-enter a credit card number). Instead, customers can save their payment method to use again for future purchases. 

An example of embedded payments is: 

‍Starbucks integrates payment capabilities and rewards into its app. This enables customers to earn stars, reload their balance, and check out in a single mobile location.

3. Branded payment cards

Many companies offer co-branded credit or debit cards which they tailor directly to the needs of their customers. Branded payment cards have been around for many years. But fintech has expanded capabilities in this space and increased opportunities for companies to offer embedded credit to customers—especially in the B2B space.

Example: 

‍BILL offers a corporate card with scalable credit limits, built-in expense controls, and seamless integration into its financial operations platform.

4. Embedded lending

Non-financial business platforms can embed personal or business loans, working capital, and other credit tools directly into the customer experience. This technology enables companies to offer customers more payment options by turning customer pain points into convenient problem-solving opportunities. 

Examples of embedded lending include:

Buy Now Pay Later platforms like Afterpay and Klarna let consumers split retail purchases into smaller payments. ‍

Lendio’s embedded lending marketplace helps digital platforms offer curated funding options to small business users in a single, convenient location—unlocking new revenue for site owners and new funding opportunities for small businesses.

Benefits of embedded finance

As a business, offering embedded finance to your customers isn’t just about convenience. It’s a way to create a competitive advantage and standout in the marketplace. 

Some of the top advantages of offering embedded finance tools to customers include: 

• New revenue streams: Embedded financial services empower you to monetize your platform through transaction fees, revenue sharing, or white-label financial products.
• Increased customer loyalty: The integration of financial tools simplifies the overall user experience. This reduces friction for customers and keeps users engaged by offering key financial services where and when they need them.

Competitive edge: As more businesses embrace the inclusion of embedded financial services into their platforms, consumer expectations are evolving. Meeting those expectations can help your business stand out and remain relevant in the marketplace.

Challenges of embedded finance

Despite the upsides, implementing embedded finance comes with hurdles as well—especially where compliance and data management are concerned. Some of the top challenges companies commonly face in this area are: 

• Regulatory risk: It’s important to partner with reputable, licensed providers to stay compliant with financial regulations. 
• Data privacy and security: Customers and regulators expect transparency and safety when your business handles sensitive financial data. ‍
• Integration complexity: Choosing the right fintech, API, and BaaS partners is critical for a smooth rollout and long-term scalability where embedded finance products are concerned.

Future of embedded finance

Embedded finance is still somewhat early in its development. Nonetheless, its impact is already reshaping how businesses serve customers. And experts predict that momentum will only continue to grow. 

Emerging trends in embedded finance include:

• More personalized financial tools tailored to user behavior. 
• Wider adoption by small and mid-sized businesses. 
• Deeper industry disruption in industries like B2B, retail, and travel.

To prepare, consider exploring potential fintech partnerships and evaluate your customer journey for potential embedded finance opportunities. Most of all, be sure to choose wisely when it comes to integration providers—especially where data security, privacy, and compliance are concerned.

SBA loans are crucial financial tools that come with distinct terms and lengths to meet various small business needs. Typically, these loans have more flexible duration options than traditional financing, ranging from short to long-term. This flexibility allows business owners to secure funding and meet the operational and expansion needs of their businesses, without damaging their long-term financial health. 

Each SBA loan program has maximum loan maturities depending on the use of the proceeds, with flexibility for the maturity based on the borrower’s ability to repay. We’ll go over typical loan lengths below, as well as long-term vs. short-term options. We’ll also cover term details for each SBA loan program and their maximum maturity limits.

What is SBA loan maturity?

Like other loans, loan maturity refers to the date when your SBA loan term ends, and the principal balance plus any outstanding interest is due. In other words, it’s the final payment deadline for your loan.

Understanding SBA Loan lengths

SBA loans are designed with a range of maturities to accommodate diverse business needs and objectives. The typical loan duration depends on the type of SBA program. 

These variable timelines allow business owners to choose a loan structure that best aligns with their capacity to repay and their strategic growth plans. Many SBA loan programs have loan terms of 10-25 years, while others are designed with shorter terms of 36 months to 5 years.

It’s important to note that simply because there is a maximum, it doesn’t mean you will get the longest term possible on your SBA loan. Lenders must state a maturity on the loan, which is the shortest appropriate term based on the use of proceeds, and your ability to repay. Although lenders determine the loan maturity, the loan length must comply with SBA rules around the specific loan program and use of funds.

Types of SBA loans and their lengths

There are three main SBA loan programs: the SBA 7(a) loan program, the SBA 504 loan program, and SBA microloans. Under each of these umbrellas, there are many different types of SBA loans, each with its own limits and rules around term length.

SBA 7(a) Loan terms

The SBA 7(a) loan program encompasses several types of loans, from the Standard 7(a) to CAPlines. Below, each loan type is broken out with term lengths.

SBA Standard 7(a) and 7(a) Small loan length

Standard 7(a) loans, and 7(a) Small loans have the same maturity rules around use of proceeds. In the chart below, you can see the maximum loan term length for both loans, based on what the loan proceeds are used for.

If standard 7(a) loans or 7(a) small loans are used for mixed purposes, i.e. land and building, working capital, and/or machinery and equipment, or refinancing any of these, the maturity can be a blended maturity. This means the lender can combine the maturities for each of the different uses to create a weighted average, or reasonable blended maturity.

However, if 51% or more of a mixed-use loan is used for real estate, the entire loan can have a maturity of 25 years.

Blended maturity also applies to all types of ownership changes, depending on what the business purchase entails.

SBA Express loan length

SBA Express loans, when structured as a term loan, have the same maturity rules as Standard 7(a) loans. 

However, if an SBA Express loan is structured as a line of credit, either revolving or non-revolving, the maturity limit is 10 years.

If the line of credit is revolving, you can draw, repay, and re-borrow funds during the revolving period, which is 5 years maximum. After that, any outstanding balance is termed out to a non-revolving loan that must be repaid fully within 10 years.

If the line of credit is non-revolving, you can draw funds up to the limit, but can’t re-borrow the funds. The line of credit must be fully repaid within the 10-year limit.

SBA CAPLines and their loan lengths

CAPLines have set maturity for each type, but also come with rules to keep in mind when it comes to time needed to pay back the loan.

Seasonal CAPLines have a mandatory “clean-up” period each season. This means a 30-day period where the borrower must bring their balance to $0. This shows the business isn’t dependent on borrowed funds year-round—just during seasonal peaks. This is required for Seasonal CAPLines, but is optional for other types.

CAPLines also require an exit strategy. The final receipt of funds from the CAPLine must occur far enough in advance of the maturity date, so that any assets acquired with the loan can be converted back into cash to make the final payment on the loan by the maturity.

Export Express loan lengths

SBA Export Express loans have different lengths depending on the structure of the loan.

If the Export Express loan is structured as a line of credit, or a revolving loan, the maximum maturity is 7 years.

If the Export Express loan is structured as a term loan, it carries the same maturity rules as a Standard 7(a) loan.

Export Working Capital Program loan lengths

EWCP loans have a maximum loan term of 36 months, although loan terms are typically much shorter depending on the loan structure.

If the EWCP loan is a single transaction-specific loan, the term may be up to 36 months, but the lender will have to justify any maturity over 12 months with documentation to the SBA.

If a transaction-based line of credit is used, this EWCP loan typically doesn’t exceed 12 months, but can be approved up to 36 months with annual renewals.

Asset-Based (ABL) EWCP loans are typically issued for 12 months, and then renewed annually up to 36 months. 

For both Transaction-Based Line of Credit and ABL loans, each renewal is treated as a new loan, and is subject to new SBA guarantee fees.

International Trade Finance loan lengths

Similar to Standard 7(a) loans, International Trade Finance (ITF) loans follow the same maturity limits based on use of the proceeds.

SBA 504 Loan terms

The SBA 504 loan program offers long-term, fixed-rate financing for major assets like real estate and equipment. Loan lengths are determined by the type of asset financed by the loan, with terms designed to match the useful life of the project. 10, 20, and 25-year debenture options are available.

Here are the maximum loan term lengths for 504 loans, depending on the project:

Third-party loans (a required loan from a private lender that is paired with the SBA portion) are required to have terms of at least 7 years for 10-year maturity loans, and 10 years for 20 to 25-year maturity loans. If multiple third-party loans are used, a weighted average maturity must be calculated.

SBA Microloan loan terms

When it comes to loan length for SBA microloans, things are a little simpler. Any SBA microloan issued has a maturity of 10 years from the note date.

Key Takeaways: What influences SBA loan length?

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Ultimately, SBA loan terms are designed to match the asset’s expected economic life, and your ability to repay within the term limits., ensuring these small business loans are structured for both stability and sustainability.

SBA loans  are a popular financing option for small businesses, offering affordable interest rates and flexible terms for entrepreneurs looking to start or expand their business. 

However, like any loan, there are limits on how much money you can borrow through the SBA program. Let's dive into the details of maximum SBA loan amounts and what they mean for small business owners.

Understanding maximum SBA loan amounts.

The maximum SBA loan amount refers to the highest sum a borrower can receive through a specific SBA loan program. These limits are in place to ensure that the loans are used for their intended purpose—to help small businesses grow and succeed.

The SBA sets different maximum loan amounts for its loan programs, including the 7(a), 504, and microloan programs. Each of these programs is designed to meet unique funding needs of small businesses, and limits will vary based on each loan program's requirements. , which we'll explore in more detail below.

Why are loan limits important?

While it would be great to receive limitless financing when you apply for a loan, loan limits help small businesses achieve a balance between being underfinanced, so they can’t grow and expand their business, and over-financed with debts that exceed their ability to pay.

Loan limits, especially those set by the U.S. Small Business Administration, help you make informed decisions and maximize financing without harming your business in the long run.

Now that you understand more about what SBA loan limits are, let's take a look at the unique loan limits for each SBA loan program.

Maximum SBA (7a) loan amounts.

The most popular SBA loan program is the 7(a) loan program, which provides working capital for small businesses. Each loan type under the SBA 7(a) loan program umbrella has different maximum amounts. They are listed in the chart below, along with the maximum amount of the loan the SBA guarantees.

Small Business Administration (SBA) loans are a popular financing option for small businesses. These loans offer affordable interest rates and flexible terms, making them an attractive choice for entrepreneurs looking to start or expand their business. However, like any loan, there are limits on how much money you can borrow through the SBA program. 

Let's dive into the details of maximum SBA loan amounts and what they mean for small business owners.

Maximum SBA 504 loan amount.

The SBA 504 loan program is specifically designed to support small businesses in acquiring major fixed assets, such as real estate or equipment. Because the 504 loan is structured differently than 7(a) loan programs, the limit for the loan amount is not intended to cover all project costs.

With 504 loans, there are three parties to the loan structure. Usually:

• 50% bank/lender financing
• 40% CDC/ SBA-backed debenture
• 10% borrower contribution (this could be more depending on the project and some business characteristics).

With that in mind, here are the maximum loan limits the SBA will provide for 504 loans.

The minimum loan amount for a 504 loan is $25,000.

Maximum SBA microloan amount.

The SBA offers a microloan program designed specifically to aid small businesses and non-profit childcare centers in need of small-scale financing. This program caters to businesses that require smaller amounts of funding than offered under the larger SBA loan programs.

Microloans are distributed to borrowers through intermediary lenders, and the SBA microloan loan limit is $50,000. The average loan awarded tends to be around $13,000.

SBA Loan Limits by use case

If you’re interested in applying for an SBA loan for specific purposes, like buying a business or improving a commercial property, this chart can help you figure out which loan program you would use, and the applicable maximum SBA loan amount.

Keep in mind that most businesses will not qualify for a loan of the maximum amount, and you must meet SBA eligibility requirements for each of these uses of proceeds to qualify.

Navigating the world of small business loans can be complex, and changes in policies or procedures by the U.S. Small Business Administration (SBA) add a new layer of challenge. However, staying informed about SBA updates isn’t optional - it’s essential for business owners who want to capitalize on growth opportunities or secure working capital in today’s environment.

In early 2025, the SBA released new guidance that goes into effect on June 1, 2025. These changes impact eligibility criteria, loan classifications, and documentation expectations across SBA 7(a) and 504 programs. If your business is considering a government-backed loan - or already relying on one - this guide breaks down what’s new, what it means, and how to prepare.

Why this matters now

The SBA SOP 50 10 8 (Lender and Development Company Loan Programs) is 448 pages long - not exactly light reading for a busy business owner. But within it are critical shifts that could impact your funding journey.

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SBA loans offer some of the most favorable terms on the market, supporting everything from working capital to equipment, disaster recovery, and growth. Missing these changes could mean: 

• Being disqualified from overlooked criteria
• Delays in the loan process due to missing documentation
• Leaving money on the table while competitors secure better funding

Key 2025 SBA Updates Every Business Should Know

The latest SBA Standard Operating Procedure (SOP 50 10 8), replaces SOP 50 10 7.1 and brings substantial changes across the board. Here’s what small business owners need to know:

Citizenship requirements just got stricter

To qualify, 100% of owners, guarantors, and key employees must now be U.S. citizens, nationals, or lawful permanent residents (green card holders). This replaces the previous 51% threshold and disqualifies any company with foreign stakeholders, even indirectly.

With the new rule, all direct and/or indirect owners or SBA guarantors must be U.S. citizens, U.S. nationals, or lawful permanent residents. SBA lenders must certify that no owners or guarantors are ineligible persons in E-Tran.

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The new rule also defines an ineligible person:

• Foreign nationals
• Those granted asylum
• Refugees
• Visa holders
• Nonimmigrant aliens
• Deferred Action for Childhood Arrivals (DACA) recipients
• Undocumented aliens in the U.S. illegally

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Finally, the SBA has introduced a six-month lookback requirement. Applicant businesses are ineligible if any associate of the business was an ineligible person in the six months before the SBA loan number was issued unless they have completely divested their ownership interest and severed all relationship with the applicant and company for the life of the loan.

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More industries are now ineligible

SOP 50 10 8 introduces a dedicated section for types of ineligible businesses in the update, with criteria for determining eligibility by business type. Businesses involved in marijuana, hemp, and cannabidiol (CBD) operations are now officially excluded again, reinstating pre-2023 policies. 

Higher SBSS score minimum for 7(a) small loans

Previously, the minimum acceptable SBSS score to be eligible for a 7(a) small loan was 155. The SBA has updated the minimum to a 165 score as of June 1, 2025.

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There’s another change worth noting. Regardless of the SBSS score obtained, a business is ineligible if it has an existing 7(a) or 504 loan that is not current (required payment not made in more than 29 days).

Stricter “Credit Elsewhere” documentation

Demonstrating that credit is not available elsewhere on reasonable terms from non-federal, non-state, or non-local sources has been a longtime requirement for eligibility. This hasn’t changed; however, where lenders had to give a broad certification and substantiation that credit wasn’t available elsewhere, they now have to give specific reasons why the applicant doesn’t meet conventional loan policy, with supporting documentation.

Lenders also can’t certify based on the applicant's credit score alone, which means a more thorough analysis of why a small business won’t meet standard loan policy requirements beyond a poor credit score. 

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As part of this, an applicant's personal liquidity, not just business liquidity will be assessed, and if an applicant has significant personal cash or assets they may be disqualified, even if the business would otherwise qualify on paper.

Lenders are now responsible for verification

While not a direct requirement, it’s worth noting that lenders are now accountable for verifying applicant eligibility. Before the rule change, the SBA took responsibility for verifying applicant eligibility requirements. Now, specific processes and frameworks have been developed for lenders to take on the burden of reviewing and documenting eligibility for an SBA loan directly, except for certain determinations that will be handled by the SBA.

Changes to SBA 7(a) loan categories

Another notable rule update is to 7(a) loan categories themselves, decreasing the upper limit for 7(a) small loans, and the lower limit for 7(a) standard loans.

SBA Franchise Directory reinstated

SOP 50 10 8 has reinstated the SBA Franchise Directory, creating a catalog of preapproved businesses for easier decision-making by lenders. As a positive, this helps franchise owners benefit from a streamlined certification process. However, if a franchise is not listed in the directory, or hasn’t submitted the required documentation to verify eligibility and receive new certification by July 31, 2025, they will be removed. 

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If a franchise is not in the directory, applicants will need to apply to get added to it before the SBA loan file can move forward.

Revenue-based financing and factoring debt can’t be refinanced

Previously, merchant cash advances (revenue-based financing) and factoring weren’t explicitly listed as being ineligible for refinancing. However, the SBA now defines merchant cash advances as “a purchase of future receivables”, not a traditional loan, so as of the effective date, these loans can’t be refinanced with SBA funds.

How SBA Rule Changes Affect Small Business Owners

The 2025 changes bring both new challenges and new responsibilities. For many small business owners, this means it’s time to:

Reassess your ownership structure

The SBA’s eligible person requirements are stricter than ever, and many small businesses that were eligible prior no longer are. You’ll need to carefully assess your current ownership structure and determine if your business meets ownership eligibility requirements.

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If it doesn’t, you can consider the path of changing your ownership structure, or explore your funding options through alternate sources beyond the SBA.

Strengthen your documentation

There's an increased need for strong documentation in multiple areas of the application process, from person eligibility to demonstrating why conventional credit isn’t available. Review your business's current documentation practices and make improvements in advance to reduce stress and errors in the updated SBA application process.

Confirm industry eligibility 

Not only do the 2025 SBA rule changes bar certain businesses from eligibility, but it also provides expanded context and examples of types of businesses that are ineligible or exceptions to each rule. Familiarize yourself with the SBA SOP 50 10 8 Section A, Chapter 1 to determine whether your business is eligible based on industry.

Know Your SBSS score

As the SBSS minimum score has increased, many businesses that were previously eligible for smaller SBA 7(a) loans may find themselves battling stricter credit requirements. Take steps to improve your score proactively to avoid being shut out of SBA eligibility.

Where Lendio can help

At Lendio, we’ve helped small businesses secure more than $535 million in SBA funding. We work with a trusted network of SBA lenders to help you:

• Understand your eligibility
• Compare loan options across lenders
• Navigate updated documentation requirements
• Explore alternatives if you’re no longer SBA-eligible

We know these rule changes are complex—but you don’t have to face them alone.

Final word: Stay ready, stay funded

The SBA’s 2025 updates reflect a shift in how government-backed capital is distributed—and who qualifies. While some of the changes may feel like roadblocks, they can also be navigated with the right information and support.

Whether you’re applying for your first SBA loan or reevaluating your funding strategy, now is the time to prepare. Review your structure, improve your documentation, and talk to a trusted partner.

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One key aspect that small business owners encounter when applying for Small Business Administration (SBA) loans is the SBA guarantee fee. This fee is a critical component of the loan process, yet it can cause confusion and questions among entrepreneurs. In this guide, we'll explain everything you need to know about it, including its associated costs, how it's calculated, and implications for your loan.

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New to SBA loans? Start with our overview of SBA loan options to explore types, terms, and how they work.

What is the SBA guarantee fee?

Because SBA loans are guaranteed up to 50-90% by the Small Business Administration, lenders pay guarantee (or guaranty) fees for some types of financing they issue under the program. These fees help cover the SBA’s costs in the event that a borrower defaults on a loan.

Although the guarantee fee is charged to the lender, the SBA allows lenders to pass the fee onto the borrower. Most lenders will typically do this.

Which SBA loans have guarantee fees?

Not every type of SBA loan will have a guarantee fee assessed. You can expect them for 7(a) and 504 loans, but not for SBA microloans. It’s also important to note that the guarantee fee is assessed only on the portion of the loan guaranteed by the SBA - not the total approved loan amount.

SBA guarantee fee costs (by program)

SBA guarantee fees are based on the guaranteed amount on your SBA, the type of SBA loan, and your repayment term.

SBA 7(a) loan guarantee fees

Guarantee fees for SBA 7(a) loans change each fiscal year. Usually, the SBA will publish updates to lender fees for the coming fiscal year in advance. However, in March 2025, the SBA published an update to lender fees in effect for the remainder of the fiscal year, which means 7(a) loans issued prior to March 27, 2025, and 7(a) loans issued after March 27, 2025 have different fees associated. 

Both are included in the tables below.

Guarantee fees for 7(a) loans issued after March 27, 2025

Guarantee fees for 7(a) loans issued before March 27, 2025

*The SBA guarantees a maximum of $3.75 million on 7(a) loans.

SBA Express loan guarantee fees for veterans

For SBA express loans made to businesses owned and controlled by a veteran or the spouse of a veteran, the guarantee fee is $0.

Export Working Capital Loans guarantee fees

Export Working Capital Program loans, another type of 7(a) loan, also have their own guarantee fee structure depending on the maturity term of the loan.

SBA 504 loan guarantee fees

Similar to the 7(a) program, the SBA publishes guarantee fees for the 504 loan program to remain in effect for the coming fiscal year.

Since the 504 program has a two-part funding structure, consisting of a portion of funding from the borrower, from a Certified Development Company (CDC), and a third-party lender, the SBA guarantee fee applies only to the CDC portion of the loan.

For the 2025 fiscal year, there is no guarantee fee on SBA 504 loans. However, the lender can charge the SBA’s annual service fee to the borrower for these loans, which is currently 0.331% for the 2025 fiscal year.

How are SBA guarantee fees calculated?

Calculating the SBA guarantee fee can seem complex, but once you understand the calculations behind it, it's much more manageable. Here is a simplified process:

1. Identify the guaranteed portion: Determine the amount of the loan that the SBA guarantees. This typically ranges between 50%-90% of the entire loan, depending on the specific SBA loan program.
2. Apply the fee structure: Using the fee rates provided by the SBA, which vary depending on the size and term of the loan, calculate the fee charged on the guaranteed portion.
3. Total loan cost: Add up the fee amount and any additional associated loan costs to understand the total cost of the loan.

Remember, the fee is based on the guaranteed portion of the loan, not the total loan amount, which means that the actual amount paid can be less than the full percentage of the entire loan.

Reach out to your SBA lender for assistance if you are having difficulties calculating potential guarantee fees. You can also check out the SBA’s online calculator to determine your guarantee fees.

Additional SBA 7(a) loan fees

Beyond the guarantee fee, small business owners should be aware of other potential charges associated with an SBA 7(a) loan. Here's a breakdown of other fees that the SBA allows lenders to collect from borrowers:

Packaging fees

Lenders can charge borrowers service and packaging fees for the SBA loan. This can take a few forms and structures, so it's important to understand what they are. These fees are for things like:

• Completing an application
• Completing documents related to an application, like business plans or cash flow projections
• Software or tech used to prepare documents

Here’s how packaging fees can be structured:

Flat fee:

The SBA allows lenders to charge a flat fee of up to $2,500 per loan without documenting services performed. Flat fees of above $2,500 require the lender to provide itemization and documentation to the SBA.

Hourly rate:

For packaging fees charged on an hourly rate, the fees must be reasonable and customary for the services performed. It must also be consistent with fees the lender charges on an hourly rate for similarly-sized non-SBA loans.

Percentage of loan amount:

For packaging fees structured as a percentage of the loan amount, the fee can’t exceed either: what the lender charges on a percentage basis for similar-sized non-SBA loans, or the following (whichever is less):

• For loans $150,000 or less: 5% of the loan amount
• For loans $150,001 or more: 3% of the loan amount

If the packaging fee is structured as a percentage of the loan amount, it cannot be more than $30,000.

Extraordinary Servicing fees

Extraordinary servicing fees are charged when your loan requires intensive, out-of-the-ordinary servicing. Examples of this could be: loan workouts, special monitoring, or complex restructures.

The fee must be reasonable and justified based on the services performed, and is subject to SBA approval. The fee can’t exceed 2% of the portion of the loan requiring the extraordinary servicing on most 7(a) loans, with the exception of EWCP loans and CAPlines.

Extraordinary Servicing fee limits for EWCP and CAPLine

Lenders can charge extraordinary servicing fees more that 2% on EWCP and Working Capital CAPlines that are disbursed on a Borrowing Based Certificate. However, these fees must be reasonable based on the extraordinary effort required, and can’t be higher than fees charged on a lender’s similarly-sized, non-SBA commercial loans.

Out-of-pocket expenses

You may see out-of-pocket expenses charged with your SBA loan. These cover necessary expenses for the lender, and typically include: filing or recording fees, photocopying, delivery charges, appraisal fees, and necessary reports.

Each out-of-pocket expense must be itemized and kept in the file for review by the SBA at any time.

You may have to reimburse your lender for any direct costs (including overhead) incurred for legal services by in-house counsel. However, these fees can’t exceed the cost of outside counsel, and must be assessed on an hourly basis.

Late payment fee

If you are more than 10 days delinquent on your regularly scheduled SBA loan payment, your lender can charge a late payment fee. It can’t exceed more than 5% of the regular loan payment.

Additional SBA 504 loan fees

Additional allowed fees for 504 loans differ in structure from 7(a) loans, and may be paid to several parties to the loan. Before you review the breakdown, here’s a quick refresher on some loan terminology that differs from 7(a) loans that you’ll see in use below.

• ‍Debenture: a loan funded by investors‍
• Net Debenture: the amount of the SBA portion of your loan that’s actually available for your project after required fees are taken out, or your take-home amount of the loan.‍
• Gross Debenture: the total amount raised through the debenture to fund the SBA portion of the loan, or the sticker price before any fees are deducted.

Conclusion

For small business owners accessing capital through SBA loan programs, understanding the SBA guarantee fee is fundamental. It's just as important to plan for this expense as it is to forecast other business costs. Always make sure to assess the full picture of loan costs and discuss any fee-related questions with your SBA-approved lender.

With careful consideration, the SBA's programs can be a powerful tool in growing and sustaining your business. Your efforts to comprehend the fee structures will position you to make well-informed financial decisions that keep your business's bottom line healthy. Remember, staying informed about the costs of borrowing is essential in the stewardship of your enterprise.