SBA loan rates are tied to a base rate that changes with the market. Lenders can charge borrowers a rate that falls somewhere between the base rate and the maximum set by the government.
Current SBA rate maximums range from 10.5% to 15.5%.
Explore the most popular SBA loan programs and their rate structures to find out which one is the best fit for your company.
Before we dive in, get familiar with the basics in our SBA loans overview- a great place to start if you're exploring funding options.
How SBA loan interest rates work.
SBA loan rates are regulated by the U.S. Small Business Administration. Private lenders negotiate their own rates with each individual borrower. But the offered loan rate cannot exceed the maximum set by the SBA for each loan program.
The maximum is tied to a base rate, which can be one of the following:
- Prime rate: The most commonly used rate, currently at 7.5%
- Optional peg rate: Updated quarterly by the SBA based on market conditions, currently 4.5%
The borrower is then charged a markup (a percentage over that base rate). That varies based on:
- Loan amount
- Type of SBA loan
- Loan maturity date
Current SBA loan rates (June 2025).
Here is how each SBA interest rate breaks down, based on the loan program and other details.
SBA 7(a) loan rates
SBA 7(a) loans can be used for general working capital needs and have interest rates that can either be variable or fixed. Fixed rates have a higher premium but never change, even if the base rate increases over time.
SBA 7(a) rates range from 3% to 8% above the base rate. Use the following table to compare rates for different loan sizes and term lengths. The current (June 2025) Wall Street Journal Prime Rate is 7.50%.
Historical Prime rates
SBA 504 loan rates
SBA 504 loans are designed to purchase assets that help with job creation or business growth, such as new facilities, machinery, or renovating an existing property. These loans are available through certified development companies (CDCs) and offer fixed interest rates.
You can apply for either a 10-year or a 20-year repayment period. The SBA 504 rates are incrementally pegged above the current rates for 5-year and 10-year U.S. Treasury issues. The rate typically totals 3% of the loan amount.
Historical U.S. Treasury rates
SBA Microloan loan rates
Microloans from the SBA help newer small businesses with startup or expansion costs. Borrowers can get approved for up to $50,000, although the average loan size is $13,000. The maximum repayment term is six years.
Microloan rates are based on the lender’s cost of funds.
Loans over $10,000: 7.75% over cost of funds
Loans of $10,000 or less: 8.5% over cost of funds
Expect SBA microloan rates to range from 8% to 13%.
SBA Express loan rates
SBA Express loans allow for a shorter approval time, so you can get faster access to capital. In fact, you'll get an initial response within 36 hours. The maximum loan amount is capped at $500,000 and rate maximums are the same as SBA 7(a) loans.
SBA Community Advantage loan rates
The SBA Community Advantage loan program was created to help businesses in underserved markets. These loans were capped at $350,000. Interest rates were negotiated by the lender but were subject to the SBA's maximums. This program was sunsetted in October 2023.
Lenders under this program are now licensed as Community Advantage Small Business Lending Companies in the 7(a) loan program and will continue to provide access to financing to underserved communities.
Typical SBA loan fees
In addition to paying interest on SBA loans, borrowers may also pay an upfront SBA Guaranty Fee.
Upfront fee on SBA 7(a) loans
This fee is based on the approved loan amount, including both the guaranteed and the unguaranteed portions.
To calculate monthly payments for your SBA loan, visit our SBA loan calculator. Need help finding the best interest rate for your SBA loan or other business term loan?
Because small businesses are so critical to the country’s success, the federal government launched the Small Business Administration (SBA) to help foster American small businesses.
The most popular way the SBA furthers its mission is through SBA 7(a) loans—if your business qualifies, you can get funding backed by the government that can help take your enterprise to the next level.
What is an SBA 7(a) loan?
An SBA 7(a) loan is a form of financing that is partially guaranteed by the U.S. Small Business Administration. These loans are named after Article 7(a) of the Small Business Act of 1953, which launched the SBA and tasked the agency with supporting American small businesses through lending.
SBA 7(a) loans are popular for financing real estate purchases, working capital, and purchasing furniture and supplies. They’re also commonly sought for refinancing existing business debt.
Are all SBA loans 7(a) loans?
SBA 7(a) loans are the most popular type of loans offered by the SBA, so many people refer to them as “SBA loans”. Keep in mind that 7(a) loans are a specific loan program offered by the SBA, and there are several types of 7(a) loans. In addition, the SBA offers other types of loan programs, such as the 504 loan program, that don’t fall under this umbrella.
Looking for information on all SBA loans, not just 7(a) loans? Check out our guide to SBA loans here.
What can an SBA 7(a) loan be used for?
Proceeds from a 7(a) loan may be used for:
- Working capital
- Equipment purchases and or/ installation
- Acquiring, refinancing, or making improvements to Real estate
- New-building construction
- Renovation or expansion
- Starting a new business
- Purchasing an existing business
- Refinancing current business debt
- Purchasing furniture, fixtures and supplies
- Multiple purpose loans
- Changes of ownership
Loan proceeds may not be used to:
- Pay off an existing business loan
- Buy out a partner
- Pay delinquent state or federal withholding taxes
- Anything else that wouldn’t be considered a sound business purpose as determined by the SBA
Types of SBA 7(a) loans
The SBA has a suite of different financing products under its 7(a) distinction, and each one is meant to fill a different need in the small business ecosystem.
When considering your options, think about how large of a loan your business needs, your intended use of the funds, and how quickly you need the money.
SBA loans require a fair amount of information and paperwork, so researching 7(a) loan types will save you time later.
Standard 7(a) loan
The standard 7(a) loan is the most common and most popular type of 7(a) loan backed by the SBA. The purpose of these loans is to allow small businesses to expand by funding working capital or the purchase of equipment, supplies, and real estate.
A standard 7(a) loan is available in amounts of $350,000 to $5 million. The maximum SBA guarantee is 85% for loans up to $150,000 and 75% for loans greater than $150,000. The SBA requires lenders to collateralize all standard 7(a) loans.
For standard 7(a) loans, while it is the lender's responsibility to perform credit analysis, loan structure and verify that the applicant meets SBA eligibility requirements, the SBA makes the final approval decision before providing a loan number.
7(a) small loan
The 7(a) small loan is similar in many ways to the standard 7(a) loans, but it’s meant for businesses that need smaller amounts of funding to get off the ground or expand.
The maximum loan amount is $350,000. Their turnaround time and eligibility decision process are the same as standard 7(a) loans. The SBA guarantees 85% of loans up to $150,000 and 75% of loans over that amount. Collateral is not required for loans under $50,000. The lender follows its collateral policy for loans greater than $50,000.
Applicants can usually expect a decision in two to 10 business days.
SBA Express loan
The SBA express loan is built for speed—sometimes, entrepreneurs need funding ASAP.
The maximum amount for an express loan is $500,000, and an application will be responded to in 36 hours or less. These loans are 50% guaranteed by the SBA. Only lenders with SBA Express authority can issue these loans, and the lender makes all eligibility, collateral, and credit decisions under delegated authority.
7(a) Export Trade Finance
The SBA has 3 core 7(a) international trade finance programs geared towards helping small businesses be competitive in export markets.
Export express loan
The export express loan was specifically created as a streamlined option for businesses in the export industry or those looking to develop an export operation. It has many similar features to an SBA Express loan, but provides a higher guarantee to mitigate international credit risk.
The loans, with a maximum amount of $500,000, have a breakneck turnaround time of just 24 hours or less. Similar to SBA Express, lLenders make all eligibility and collateral decisions through delegated authority. The SBA guarantee is 90% for loans of $350,000 or less and 75% for larger loans. This funding can take the form of a term loan, or a revolving line of credit that can last up to seven years.
Export working capital loan
Also tailored for exporters, the export working capital loan is meant to fund working capital for businesses that generate export sales.
These loans can range up to $5 million, and the SBA guarantee is 90%. Eligibility decisions are made by the SBA or lenders who have delegated EWCP authority. Unlike other 7(a) loans, there is no maximum interest limit imposed by the SBA for export working capital loans. The decision turnaround time is five to 10 business days.
Collateral is required, usually in the form of export inventory and personal guarantees from a business’ owners. This loan can take the form of a term loan, or a revolving line of credit for three years or less.
International trade loan
International trade loans are SBA 7(a) loans aimed at businesses that want to grow their export side or need to modernize their operation to handle foreign competition.
The maximum loan amount is $5 million, and the eligibility decisions, turnaround time, and SBA guarantee are the same as for export working capital loans. For international trade loans, the loan maturity is set at 10 years for permanent working capital.
Equipment and machinery, loans mature up to 10 years or at the useful life of the equipment (not to surpass 15 years). Real estate loans mature at 25 years.
7(a) CAPLines
CAPLines of credit are a form of a standard SBA 7(a) loan that works as a line of credit instead of a loan.
Remember, a business line of credit is a form of financing that allows businesses to access money as expenses arise, similar to a credit card. With a business loan, on the other hand, a full amount is disbursed upon approval, and repayments are made based on the approved amount.
The loan maximums, terms, and decision process of CAPLines of credit are the same as for standard 7(a) loans. The SBA offers four types of CAPLines:
Working Capital CAPLine
A line of credit for businesses that are unable to meet credit standards for other long-term financing, typically businesses that provide credit to other businesses, and in which repayment is based on assets.
To be eligible for a Working Capital CAPLine, your business must generate accounts receivable (not notes receivable), and/or have inventory.
Contract CAPLine
A line of credit aimed at financing businesses that work on a contract basis. Rather than permanent working capital, this specific type of working capital is meant to be used for working capital for one or more specific projects.
Builders CAPLine
A line of credit for small general contractors or builders that construct or renovate residential or commercial buildings. To be eligible for the Builders CAPline, you must be a construction contractor or a homebuilder with demonstrated experience in profitable construction or renovation.
Seasonal CAPLine
The Seasonal CAPLine is a line of credit meant for businesses that operate on a seasonal basis to help provide working capital for the busy season. To be eligible, your business must have been in operation for at least one year, and be able to demonstrate a pattern of seasonal activity. You can’t use this working capital to weather downturn or slow seasons, and must use it to finance increases in accounts receivable, inventory, and associated labor costs.
7(a) Working Capital Pilot (WCP) Program
Launched on August 1, the WCP pilot program offers monitored lines of credit to businesses through the SBA 7(a) loan program.
Through the pilot program, eligible businesses can receive a line of credit up to $5 million. In order to qualify, businesses must operate in industries like manufacturing, wholesale, or professional services and have at least one year of operating history.
Businesses applying must be able to provide financial statements, accounts receivable, and accounts payable, as well as regular inventory reports.
The loan guarantee is the same as regular SBA (7a) loans.
Eligibility requirements for SBA 7(a) loans
Most U.S. small businesses can qualify for an SBA 7(a) loan, but there are a few exceptions such as nonprofits and certain restricted membership organizations. The SBA also requires that business owners meet basic criteria around location, profit status, size, citizenship and access to other financing.
For a full breakdown of eligibility rules - including disqualifiers, credit considerations, and ineligible businesses, read our guide to SBA loan eligibility requirements.
SBA 7(a) loan terms
SBA loans are meant to support long-term small business growth.
Loan maturity terms, as a result, are based on the ability to repay, the purpose of the loan, and the life of assets financed by the loan. Loan maturity refers to how long it takes for a borrower to repay the loan. At the end of your loan maturity term, you’ll make the final repayment.
The maximum maturities for SBA 7(a) loans are as follows.
- The maximum maturity for real estate is 25 years.
- The maximum maturity for equipment is 10 years.
- The maximum maturity for working capital or inventory is 10 years.
SBA 7(a) loans used to buy fixed assets, like real estate or equipment, carry a maturity limited to the economic life of those assets, not to exceed 25 years. Fixed assets, which also include commercial property or furniture, are assets meant for long-term use that cannot be quickly converted to cash.
SBA 7(a) loan rates
With SBA 7(a) loans, the interest rate is set by the lender. In most cases, the lender will determine a rate based on creditworthiness, loan amount and repayment terms, and the applicant either accepts or rejects that rate. In many cases, you might be able to further negotiate the rate with your lender.
Current SBA loan interest rates are tied to the prime rate, which can be fixed or variable. As of June 11, 2025, the prime rate is 7.5%. The SBA allows lenders to add a markup, but caps how high the rate can go.
Want to see exact SBA rate ranges for the current month, caps, and how your rate is calculated?
See our guide to SBA Loan Interest Rates for current figures and the full breakdown.
SBA 7(a) fees
Along with interest rates, you should expect to pay a guarantee fee to the lender for SBA 7(a) loans. This fee will be based on the size of the loan and the type of 7(a) loan you apply for. Guarantee fees for 7(a) loans for fiscal year 2025 range between 2% and 3.5%.
For a full table and breakdown of guarantee fees on 7(a) loans, read our guide to SBA guarantee fees.
Notably, the SBA expressly prohibits lenders from charging most other fees, including processing, origination, application, renewal, and brokerage fees.
Lenders are, however, allowed to charge a flat fee of $2,500 per loan.
Curious what you might pay on an SBA 7(a) loan? Use our SBA Loan Calculator to estimate your payments!
How to apply for an SBA 7(a) loan
While hundreds of different lenders offer 7(a) loans, the process is fairly standardized by the SBA.
The SBA 7(a) loan application process involves three main steps: choosing the right loan, gathering financial documents, and submitting your application to a qualified lender. Depending on the loan type, approval timelines can range from a few days to several weeks.
For a detailed checklist of required documents, step-by-step guidance, and tips to speed up the process, explore “How to Apply for an SBA Loan: Complete Steps and Requirements.”
Alternatives to SBA 7(a) loans
The requirements for SBA 7(a) Loans can be stringent. Maybe you feel it isn’t right for your business at this time! Here are some potential alternatives to SBA 7(a) loans to explore:
- SBA Microloans- These loans are smaller, and geared to newer businesses, but come with less strict borrower requirements.
- SBA Express Loan - These loans don’t require SBA review, which means you could work with a lender who can provide you funds you need quickly, with slightly less requirements than an SBA 7(a) loan.
- Lendio - While you can apply for an SBA loan with Lendio’s quick application, we can also connect you with online lenders to offer other flexible financing options that work for your business.
Ready to apply for an SBA 7(a) loan?
Apply for an SBA loan with Lendio’s quick application. We’ll connect you with the right lender for your situation, and can, on average, get you funded with a 7(a) small loan in less than 30 days.
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?
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.
Business loan credit score requirements vary based on many factors. Different lenders (even non-traditional lenders) might look at the same business loan requirementsand weigh their importance differently.
Before you go into the bank, you’ll want to know where you stand with these four very important metrics:
- Your credit score—both your personal and business score (yes, there is more than one)
- Years in business—most banks want to see two or more
- Your annual revenues—more is better than less
- Your collateral—there are different types of collateral, depending upon the type of loan you’re looking for
Credit score is number one for a myriad of reasons. It’s the most important metric and is the cause of most rejections. Although there is hope for business owners with less-than-stellar credit, those options come with a cost. Minimum credit score requirements vary by loan type and lender, but you'll have the most options available to you with a minimum credit score of 650.
Minimum credit score by loan type.
Here are the minimum personal credit score requirements for each type of business financing to get an idea of the options available to you.
Minimum credit score by lender type.
Here are the minimum personal credit score requirements for each type of business financing to get an idea of the options available to you.
Why does credit score matter?
Credit scores play an influential role in securing a business loan. This three-digit number quantifies your fiscal responsibility and reliability, providing lenders with a quick, objective assessment of your credit risk.
In essence, a good credit score signals to lenders that you've consistently fulfilled your financial obligations to other lenders on time and are likely to repay their loans promptly. Consequently, businesses with higher credit scores are often offered more favorable loan terms, including lower interest rates and longer repayment periods.
Conversely, a bad credit score could denote a higher risk proposition for the lender, potentially leading to a rejected application or a higher interest rate and stringent loan conditions.
About personal credit scores.
One of the most commonly used personal credit scores is the FICO Score, developed by the Fair Isaac Corporation. The FICO Score is calculated based on five main components, each weighted differently:
- Payment history (35%) - This represents whether you've paid past credit accounts on time.
- Amounts owed (30%) - This includes the total amount of credit and loans you're utilizing compared to your total credit limit, also known as your credit utilization ratio.
- Length of credit history (15%) - This considers the age of your oldest credit account, the age of your newest credit account, and an average of all your accounts.
- New credit (10%) - This comprises the number of new accounts you've opened or applied for recently, including credit inquiries.
- Credit mix (10%) - This takes into account the diversity of your credit portfolio, including credit cards, retail accounts, installment loans, mortgage loans, and others.
FICO credit scores range from 300 to 850. Here's a general classification of FICO scores:
Bad credit: 300-579
Within a credit score of 300-579, you'll struggle to qualify for business financing. Once your score gets above 500, you may qualify for a cash advance, equipment financing, or invoice factoring depending on the lender and whether you meet other requirements.
Fair credit: 580-669
With a fair credit score of 580-669, you'll meet most minimum credit score requirements for a cash advance, invoice factoring, or equipment financing. If your score is 600 or above, you're more likely to qualify for a line of credit or term loan.
Good credit: 670-739
Within this credit range, you'll likely meet all lender's minimum credit requirements for term, SBA, commercial real estate, and bank loans.
Very good credit: 740-799
Exceptional credit: 800-850
About business credit scores.
A business credit score, much like a personal credit score, is a numerical representation of a business' creditworthiness. It provides a quick, objective snapshot of the financial health of a business and its ability to repay debts on time. The score is generated by credit bureaus such as Dun & Bradstreet, Equifax, and Experian, and ranges typically from 0 to 100.
The calculation of a business credit score considers several factors, including:
- Payment history - As with personal credit, timely repayment of debts is crucial. Regular, on-time payments to creditors enhance your business credit score.
- Credit utilization ratio - This measures how much of your available credit your business is currently using. A lower ratio (meaning you're using less of your available credit) can positively impact your score.
- Length of credit history - Longer credit histories can benefit your business credit score, as they provide more data about your business' long-term financial behavior.
- Public records - Bankruptcies, liens, and judgments can negatively affect your business credit score.
- Company size and industry risk - Larger companies and those in industries considered less risky may have higher credit scores.
Lenders will typically review both your personal credit score and business credit score when qualifying you for a business loan.
How to increase your credit score.
If your credit score isn’t where you’d like it to be, there are several steps you can take to boost your score.
Monitor your credit reports.
Equifax, Experian, and TransUnion are where you’ll want to go to see your current credit reports. Make sure the information is correct and that your credit report reflects reality. Make sure that the report is accurate and that accounts that aren’t yours aren’t reported. Bankruptcies that are over 10 years old or the associated accounts shouldn’t be reflected on the report. Other negative information older than seven years should also not be included in the report.
Get a major credit card.
Getting a credit card and using it wisely is one way to boost your credit. Be sure to make your payments on time.
Arrange automatic payments on every card or loan.
It’s easy to forget to make a payment when it’s due or let travel or a busy schedule distract you. However, credit scores are very sensitive to whether or not you make payments on time, so do all you can to keep your payments regular and on time.
Don’t let disputes go to collections.
If you have a dispute with a vendor and you allow it to escalate to collections, it doesn’t look good on your report. Rather than taking this path, it’s better to pay under protest and go to small claims court. Don’t get sued, though, as lawsuits and judgments are also major dings to your credit.
Consolidate your debt if you can’t pay it off quickly.
The scoring criteria treat installment loan balances kinder than the same balances on a credit card. But be wise with your credit card balances and avoid running them up.
Take debt off your credit report entirely.
This is a tough one, but family, friends, or dipping into your retirement plan is sometimes a good way to get credit off your report entirely. Be careful about dipping into your 401k. If you borrow from a 401k and repay it there are no tax consequences, but if you withdraw money, there will be tax consequences.
Don’t close accounts or let them be closed.
It might not help your scores and could hurt them. If you’ve got a card you haven’t used for a while, take it out to dinner or buy a tank of gas, just make sure they’re included with your other automatic payments.
Don’t apply for credit you don’t need.
At about five points an application, if you have sketchy credit, it can add up.
Depending on how bad your score looks today, you might need to invest some time—but there is hope. Just remember, your credit score is the first thing any lender will look at before they offer you a small business loan.
Ready to compare business loan options? Apply for a small business loan.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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:
- 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.
- 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.
- 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.
According to the U.S. Small Business Administration (SBA), small businesses account for 99.9% of all businesses in the U.S. But what exactly is a small business?
The SBA sets specific criteria to categorize businesses under the ‘small business’ designation, in order to determine eligibility for support initiatives and funding, like SBA loan programs. Below, we’ll dive deeper into how the SBA defines a small business, so you can determine whether you meet and qualify for certain benefits.
The SBA definition of a small business.
The SBA defines a small business by the maximum number of employees, or maximum amount of annual receipts it has. However, these maximum limits depend upon the industry of the company, which we'll explore below.
Criteria for qualifying as a small business.
The SBA uses two possible size criteria that a business can qualify as “small” under - the Industry Size Standard, and the Alternative Size Standard.
SBA Industry Size Standard
For each industry classified by the North American Industry Classification System (NAICS), the SBA weighs economic characteristics like:
- Degree of competition
- Average business size
- Start-up costs and entry barriers
- Distribution of businesses across the industry by size
- Technological changes
- Competition from other industries
- Growth trends
- Historical activity
- Unique factors
Then, the SBA establishes an industry size standard to define a small business in that industry, consisting of the maximum number of employees, or maximum amount of average annual receipts a business can have to be classified as small.
To find the specific size standard for your industry, here’s what to do.
1. Look up your NAICS code.
You’ll need to have your NAICS code on hand to find your size standards. This is a six-digit code number that helps companies explain what they do. You can use the NAICS search tool to find your industry, or read our guide on how to look up your NAICS code for more information.
2. Look up your SBA industry size standard.
Once you’ve found the NAICS code that best describes the primary activity of your business, or the one that produces the most revenue, you can find the SBA size standards for that industry.
Here’s a sampling of several industries and the maximum average annual receipts or number of employees that qualify them as a small business. In reality, there are hundreds of NAICS codes, so you should look at the complete listing in the SBA table of size standards.
3. Verify you meet the SBA size standard
Confirm your employee count, or your annual receipts meets the industry size standard. You can also use the SBA size standards tool to input your information and find out if you meet the SBA’s criteria for a small business.
In addition to maximum average annual receipts and maximum number of employees, the SBA will consider whether your company meets other eligibility requirements for SBA loans.
SBA Alternative Size Standard
Small businesses can also meet the SBA size requirement through the alternative size standard.
To meet this size standard, the business can’t have a tangible net worth over $20 million dollars, and the average net income after Federal income taxes (excluding carry-over losses) for 2 full years before the application can’t exceed $6.5 million.
Benefits of being classified as a small business.
If the SBA does classify your company as a small business, this opens the door to several resources and benefits.
SBA loans
There are a number of SBA loan programs that offer low rates and longer repayment terms you might not be able to find elsewhere.
The 7(a) loan is the SBA’s most popular program and offers up to $5 million in capital for small business owners. Upon approval, you can use this capital to cover a variety of expenses, such as startup expenses, real estate, short- and long-term working capital, and equipment.
Business development programs.
The SBA has Small Business Development Centers (SBDCs) throughout the U.S. to provide small businesses with counseling, training, and technical assistance. Another organization called SCORE also offers free mentorship and resources. You can utilize these development programs if you qualify as a small business.
Government contracts.
The SBA works partners with federal agencies to award 23% of prime government contract dollars to qualifying small businesses. If you meet the SBA definition for small business, you can submit bids and take advantage of government contracts, which offer an additional, reliable stream of income.
Research grants
The Small Business and Innovation Research research grants are designed to encourage small business owners to dive into technology and commercialization opportunities. While this is a highly competitive program, it also offers small businesses the chance to expand your technological investment and potentially profit from commercialization.
Tax incentives
As a small business, you can also save money with tax incentives. The Small Business Health Insurance Tax Credit, for example, gives eligible small business owners the chance to save up to 50% of employee health care costs, if they buy insurance from the Small Business Health Options Program (SHOP). Some cities, like Philadelphia, also award tax credits to entrepreneurs and small business owners.
Bottom line
If you believe you’re a small business owner, there’s a good chance the SBA does, as well. But your average annual receipts and number of employees may position you as a medium sized or larger business instead. That’s why it’s wise to do some research and determine where you stand. If the SBA does consider you as a small business, you’ll have access to resources, funding options, and incentives that larger businesses won’t qualify for!
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