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You might consider an SBA microloan if you’re trying to start or expand a small business.

But how exactly does getting a microloan through the SBA work? What do you need to meet the requirements? What do terms look like? How do you get started with an application?

We’ll answer  all these questions in more in our guide to SBA microloans. We’ll explain how it all works, highlighting requirements, current interest rates, microloan lenders, alternatives, and how you can apply today.

What is an SBA microloan?

The SBA microloan program consists of small loans funded by the Small Business Administration. However, these loans don't come directly from the SBA to the borrower. Instead, the SBA provides the funds to a network of intermediary lenders, such as community based nonprofit lenders.

This network then provides microloans to eligible small businesses and certain childcare centers. Participants in the nonprofit lender network are selected not only for their experience in lending, but in management and technical assistance as well, so that these intermediaries can administer the microloan program effectively.

SBA microloans provide financing to traditionally underserved businesses, such as startups, women-owned companies, and minority-owned businesses.

Eligible businesses can borrow up to $50,000, but according to the SBA, the average microloan is around $13,000.

What can SBA microloans be used for?

Microloans can be used for many purposes, affording small businesses flexibility when needing to rebuild, re-open, repair, or improve their business.

Seeking an SBA microloan might be a solution if you are looking to:

• Access working capital
• Purchase or replenish inventory or supplies
• Replace or purchase furniture or fixtures in your business
• Purchase new machinery, or secure equipment upgrades

However, you can not use an SBA microloan to pay existing debts, settlements of lawsuits, trade disputes, fines or penalties, or purchase real estate. You also can’t use the SBA microloan for personal, non-business use.

SBA microloan requirements

The SBA microloan loan program is geared for early-stage businesses and startups, but all for-profit small businesses and certain nonprofit childcare centers are eligible.

Because SBA microloans target early-stage businesses and underserved business segments, the requirements for qualification are less stringent than other types of traditional loans. Even if you have limited credit history or lower income, you may qualify.

Of course, each intermediary lender will have its own eligibility requirements, but most will ask for some or all of the following:

• Collateral and/or a personal guarantee from the business owner
• Minimum credit score - 620 or higher is good to have, but intermediary lenders may accept lower scores
• Owner’s Personal finance history
• Business finance history, with current cash flow or cash flow projections
• A certain location within the lenders geographic service area
• A minimum amount of time in business

SBA microloan rates, fees and repayment terms.

Although the SBA places certain restrictions on intermediary lenders, such as not exceeding $50,000 in loan amounts, interest rates and fees are up to your specific lender.

The interest rates will vary depending on your lender, but they typically range between 8% and 13%. And repayments terms are available for up to seven years.

SBA microloans also cannot be made as a line of credit - the microloan is structured as a term loan.

Pros and cons of SBA microloans

Pros

• Easier to qualify for: If you’re a startup or don’t have much business history, it can be hard to qualify for a business loan. Microloans, on the other hand, come with less stringent requirements, having been built to provide financing to businesses that traditionally struggle to find funding. 
• Faster funding: If you apply for a traditional SBA loan, the application and funding process can take months to complete. In comparison, you could receive funding through your microloan in just 30 days. 
• Low interest rates: Like all SBA loans, microloans come with low interest rates. The rates will vary depending on your lender, but the average rate is between 8% and 13%.
• Flexible loan terms: SBA microloans come with repayment terms of up to 7 years, so your monthly payments are more affordable. 

Cons

• Small loan amounts: If you need to borrow more than $50,000, the microloan program might not be the best option for you. 
• Spending restrictions: SBA microloans do come with certain spending restrictions. For instance, you can’t use the funds to pay down existing debt or purchase real estate. 
• Lenders may charge fees: The SBA caps its fees, but individual lenders can charge their own fees. For instance, you may have to pay an application fee, loan processing fee, or closing costs.
• Availability is limited: Since SBA microloans are offered by nonprofit intermediary lenders, these loans can be harder to find. These lenders don’t have the resources and staff that larger lenders have, so these loans might not be available in your area.

Finding SBA Microloan Lenders

The SBA has hundreds of lending partners located across the country, and provides a comprehensive list of microloan lenders to help you find a match. 

Most lenders will require you to either speak to a lending specialist over the phone or apply in person. 

The lender you work with will inform you about any necessary paperwork and documentation to apply. In addition, some lenders may require that you complete a workshop or training program as part of the application process. 

As part of your paperwork, you’ll need to provide a range of information, including:

• Proof of identity
• Description of collateral
• Balance sheet data (income and expenses)
• Personal and business tax records
• Business details (industry, licensing, assets, leases, etc.)

Once you’ve submitted all the required paperwork, your application is complete, and your lender will review and process the loan.

Alternatives to SBA microloans

If you’re not sure if an SBA microloan is the right fit for your business, here are some alternatives to consider:

• SBA 7(a) loans: SBA 7(a) loans are a good choice for businesses that need larger loan amounts. These loans are available for up to $5 million, but the qualification criteria are more strict. 
• Business credit cards: A business credit card can be used for any business purchase, and the application process is relatively easy. If you go this route, look for a card with an introductory 0% APR. 
• Invoice factoring: If you have a lot of cash tied up in your unpaid invoices, invoice financing allows you to leverage your outstanding invoices to get access to capital. 

The bottom line

SBA microloans can help startups and small businesses access the capital they need. These loans are a good option for traditionally underserved borrowers, like women and minorities, or low-income community businesses. If you’re interested in exploring your loan options, you can use Lendio to quickly compare loan offers from multiple lenders.

Business loan credit score requirements vary based on many factors. Different lenders (even non-traditional lenders) might look at the same  business loan requirements and weigh their importance differently. 

It’s also true that your relationship to your lender may open more opportunities for you, even with a credit score that’s less than perfect. If you have a long relationship with your bank or credit union, or use a platform or service that provides financing to customers, these relationships can open the door to business loans not available to the general public.

Before you go into the bank, you’ll want to know where you stand with these four very important metrics:

1. Your credit score—both your personal and business score
2. Years in business—most banks want to see two or more
3. Your annual revenues—more is better than less
4. 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:

1. Payment history (35%) - This represents whether you've paid past credit accounts on time.
2. 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.
3. 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.
4. New credit (10%) - This comprises the number of new accounts you've opened or applied for recently, including credit inquiries.
5. 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 revenue-based financing, 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 revenue-based financing, 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:

1. Payment history - As with personal credit, timely repayment of debts is crucial. Regular, on-time payments to creditors enhance your business credit score.
2. 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.
3. 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.
4. Public records - Bankruptcies, liens, and judgments can negatively affect your business credit score.
5. 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.

If your credit score isn’t where you’d like it to be, there are several steps you can take to improve your score both quickly and over time. 7 tips to boost your credit score. 

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.

Every great business has to start somewhere. The founders of Apple and Amazon launched their business dreams in garages. Samsung began as a grocery store. Coca-Cola originally made its product in jugs and sold the now-famous soda for a nickel a glass at a local pharmacy.

Many businesses start from nothing before becoming something special. When the right moment arrives, securing the right funding for your startup can be pivotal in getting your business off the starting block and on the path to success.

The good news? Startup business loans exist, even if you have no revenue or a limited credit history.

While traditional lenders prefer established businesses, there are alternative financing options designed specifically for entrepreneurs starting from scratch.

Getting a startup loan with no money or revenue.

Getting funding as a brand-new startup with no money can be a challenge. The majority of small business loans have at least some minimum revenue requirements.

So, if you have the ability to wait until your business is earning some money, it could open the door to more financing options and more attractive borrowing terms. 

In the meantime, there are at least two potential ways to get a loan for your startup before it begins earning revenue.

Equipment financing

Some equipment financing lenders (though not all) are willing to work with startups. These lenders may have no minimum monthly revenue requirements and no minimum time in business requirements for applicants to satisfy.

The collateral your business is purchasing secures the loan and reduces the risk for the lender. However, you may likely need decent personal credit to qualify for this financing option, depending on the lender.

SBA microloans

An SBA microloan provides financing of up to $50,000 for small businesses. The loans are intended to support underserved communities and are distributed by nonprofit or community microlenders.

The requirements to qualify for a microloan will vary by the lender. Some will review your credit score and personal finances to qualify you for a loan while others will want to see a longer financial history for your business. While some of these lenders may not require positive business cash flow, they may still require a personal guarantee and/or collateral to secure the loan.

How to get a startup business loan with no money or revenue.

Decide how much you need

A key step in finding the loan that matches your business needs is identifying how much money you’ll need to borrow. Every lender has a different range of financing they are comfortable offering. Therefore, you probably wouldn’t search for a $5-million loan in the same place you’d search for a $5,000 loan.

Determine your timeline

Likewise, you should figure out how quickly you need the money you borrow to arrive. Some loan proceeds may be available in days or hours. For other loans, the funding process could take weeks or months.

Determine your budget

Next, crunch the numbers and see which loan gives you the best bang for your buck. There are plenty of easy-to-use loan calculators available online. So don’t worry if math isn’t your strong suit. (Note: It’s wise to compare multiple loan options to make sure you’re getting the best deal available for your small business.) 

Alternative forms of financing for your startup.

It’s not always easy to access business funding as a new startup. According to Gallup, 77% of small business owners use personal savings as a source of initial capital. Nonetheless, there are alternative ways to finance your business dreams that don’t involve potentially draining your personal bank account. 

Here are a few alternative business funding options to consider. 

• Crowdfunding - Crowdfunding is a way to raise money online for your young business—either by seeking loans from multiple investors (debt crowdfunding), asking for donations (donor crowdfunding), selling off small portions of your business (equity crowdfunding), or offering incentives for contributions (reward-based crowdfunding).
• Business Credit Cards - A business credit card could be a good financing option for startups with no revenue and no established business credit score. Depending on the type of business credit card you apply for, you may need good personal credit to qualify. But there are some options (including secured business credit cards) for small business owners with no credit or bad credit. 
• Family and Friends - Some small business owners are able to borrow money or raise investment funding from family members and friends. If you’re fortunate enough to have this option available to you, be sure to consider the risk up front. Should your business fail or if you’re unable to repay a loan from a loved one, these complications could damage important relationships. 
• Grants - For a startup, small business grants can be an appealing way to raise money since the business doesn't have to repay the money it receives. Yet with grants, you might also face a lot of competition. It can often be a challenge to stand out from other applicants where small business grants are concerned.

As a small business owner, you might assume you won’t qualify for financing without significant collateral. But with an SBA loan—backed by the Small Business Administration—you could get the funds you need even without traditional assets. However, you’ll still need to meet certain requirements and demonstrate an ability to repay.

Here’s the importance of collateral in the SBA loan process, what qualifies as SBA loan collateral, and how to navigate the process confidently and effectively.

What is collateral in business lending?

Collateral refers to the assets or property pledged to a lender in exchange for funds. If the borrower doesn’t repay what they owe, the lender can seize the asset instead.

Some small business loans—called secured loans—require collateral as it can reduce risk in case of borrower default. Unsecured loans don’t rely on collateral, which can make them riskier to the lender. Because of this, borrowers may face stricter lending criteria.

Collateral comes in many forms, and it may be physical or non-physical. The type of collateral and amount needed depends on the lender, loan program, and loan amount. But having it can make it easier for borrowers to qualify for funds.

Note that some lenders will only accept business assets as collateral. This may include the things your company owns, like machinery or commercial real estate. Others, including some unsecured loans, may require a personal guarantee. This is essentially a promise the borrower makes to repay their debt if their business cannot.

Want to learn more about the basics of collateral, including what typically qualifies as collateral and what to do if you don't have any? Here's everything you need to know about collateral for a business loan.

How SBA loans handle collateral differently

The SBA program is designed to help borrowers who may lack strong collateral but can provide proof that they can still repay their debt. Most SBA loans are guaranteed by the U.S. government up to the following amounts:

• 75% for most 7(a) loan programs above $150,000
• 85% for most 7(a) loans programs under $150,000

The SBA also guarantees up to:

• 50% for SBA Express Loans
• 90% for Export Working Capital Program, Export Express, and International Trade Loans

This partial guarantee means less risk to the lender in case of default. It also means SBA lenders may be more flexible with collateral requirements compared to traditional banks.

Of course, collateral is still important, and many SBA loans do require it. But a lack of collateral doesn’t automatically disqualify a borrower from financing.

Collateral requirements by SBA loan type

SBA loan collateral requirements depend on several factors, including loan amount and type. These are the typical guidelines for business owners and what qualifies as collateral for different SBA loans.

SBA 7(a) Loans

The SBA 7(a) loan program includes Standard 7(a) loans and 7(a) small loans.

Standard 7(a) loans come in amounts ranging from $350,001 to $5 million. They’re considered “fully secured,” meaning all assets being acquired, improved, or refinanced using the loan must be pledged to the lender. This also applies to additional fixed assets valued up to the loan amount.

Meanwhile, 7(a) small loans cap out at $350,000. Loans for $50,000 or less typically don’t require collateral. Anything above that requires lenders to take any available collateral.

For loans over $350,000, adequate collateral is preferred. However, the SBA won’t decline a loan solely for insufficient collateral if the borrower demonstrates the ability to repay.

SBA Lenders may file a UCC-1 lien to secure the loan against business assets. Check the loan agreement for details.

SBA 504 Loans

SBA 504 loans are secured by the fixed assets being financed. This is usually commercial property or large equipment.

These loans cap out at $5.5 million. The funds come from three sources:

• Bank or credit union (50%),
• Certified development company or CDC (40%)
• Borrower (10%)

With an SBA 504 loan, the bank serves as the first lien. There’s also generally a second lien position from the CDC portion of the loan.

SBA Express and CAPLines

These are similar to 7(a), but may have faster processes and varying collateral thresholds depending on lender policy.

The SBA Express program caps out at $500,000, but lenders may not require collateral for loans under $50,000. Loans exceeding that amount may have lender-specific requirements.

CAPLines has its own limits and requirements. These are largely based on the specific program.

Other SBA loans

Under the SBA program, there are several other small business financing options. Each one has its own collateral requirements. For example:

• Microloans—These cap out at $50,000, but intermediaries may require some kind of collateral
• Disaster loans—Loans exceeding $50,000 require collateral‍
• International trade loans—These cap out at $5 million and have separate collateral requirements

Types of acceptable collateral for SBA loans

Types of acceptable collateral for SBA loans include:

• Real estate—commercial or personal property (especially with equity)
• Business equipment—machinery, vehicles, computers, tools, etc.
• Inventory—retail or wholesale stock that can be sold or liquidated
• Accounts receivable—invoices due from customers
• Cash savings or deposits—from business or personal accounts
• Financial instruments—stocks, bonds, etc.
• Personal assets—personal property and a personal guarantee may be required

Personal guarantees

A personal guarantee isn’t physical collateral, but rather a legal commitment to repay the loan if your business fails. It may increase your chances of getting approved, but it also puts your personal assets at risk. This is because the lender can still come after you—and your personal property—for repayment.

The SBA requires personal guarantees from any business owner with at least a 20% stake in the company. Some lenders may require multiple guarantors or multiple individuals to offer a personal guarantee.

What happens if you don't have enough collateral?

If business collateral is limited, an SBA lender might accept personal assets instead. In some cases, such as with certain loans under $50,000, they may waive the collateral requirement altogether. You’ll still need to provide a personal guarantee, though.

Generally, lenders will document what’s available and evaluate based on factors like:

• Collateral
• Personal and business credit profile
• Any recent delinquencies or bankruptcies
• Business financials (including cash flow and debts)
• Your business plan
• Down payment (if applicable)

The SBA specifically states that loans should not be declined solely due to a lack of collateral. As long as there’s a reasonable assurance of repayment, you could potentially qualify. Lenders may also ask you to offer whatever assets you have, even if they don’t fully secure the loan.

Collateral is just one piece of the puzzle

SBA loan collateral requirements vary by program, loan amount, and other factors. But thanks to the SBA’s guarantee, small business owners may find it easier to access the funding they need even when traditional lenders would shut the door.

With the right financial foundation and preparation, most borrowers can find a path forward—even with limited collateral. If you’re ready to explore your options, consider applying now with Lendio.

An SBA loan may be just what you need to level up your business and stay competitive. While having a strong credit score improves your chances of qualifying and getting better loan terms, some lenders allow flexibility. It’s possible to get approved even with bad credit in some cases.

However, understanding SBA loan requirements can greatly improve your chances of hearing “yes” from a lender and can cut down on application time. This article covers the different loan types, minimum requirements, and steps you can take to improve eligibility, even if your credit is less than ideal.

Can you get an SBA loan with bad credit?

It’s true that a better score often leads to better credit terms, but approval can also depend on these factors:

• The specific loan program or type of loan you’re applying for
• The lender’s internal lending rules and policies
• Business characteristics such as your time in business, demonstrated success, and cash flow
• Whether you can put up large amounts of collateral
• Your specific credit issues (amounts owed, late payments, bankruptcies, etc.)
  

Because multiple factors play into how a lender assesses risk, there’s not a one-size-fits-all list of things to aim for. A business that’s lacking in creditworthiness may make up for it with a proven business plan and valuable collateral to secure the loan. Lenders look at the full picture, not just a credit score.

Best SBA loan programs for borrowers with bad credit

If your business got off to a rocky start or you’ve made some missteps in the past, you’re not shut out of financing. In fact, lenders report that a business’s overall financial position is the main thing they look at, not credit history.  

Because the individual lenders (banks, neobanks, credit unions) set additional requirements, on top of general SBA loan requirements, for their institutions, you may do best by shopping around. Here are the general loan options available to help you get started.

SBA Microloan Program

This SBA loan program focuses on underserved communities and startups, which often face unique challenges in starting and keeping a business going. The minimum credit score for these loans is typically around 620. (Although, because lenders each set their own internal guidelines, this can vary slightly.)

The maximum amount businesses can borrow through the program is $50,000, making this a better option for improvements, working capital, supplies, or equipment. The loan funds cannot be used for paying off debt or purchasing real estate, and average around $13,000 per loan. Plan to demonstrate creditworthiness with a strong business plan and a willingness to work with a technical assistance partner to improve your chances of approval.

SBA 7(a) Loan

This loan is admittedly a bit more difficult for those with bad credit to access. If you can show business strength, your chances improve. Things lenders may use to offset a low credit score include:

• Strong collateral (property, equipment) that can be used to secure the value of the loan
• Solid business cash flow
• Demonstrated history of being successful in your business for multiple years
  

Established businesses may achieve better results than startups and those without a proven track record of profitability.

Key requirements to offset poor credit

The saying, “credit isn’t everything,” may be true when it comes to SBA loans, as long as you can show lenders your other business strengths. Any or all of the following can work in your favor and help a lender overcome objections to past late payments, bankruptcies, and defaults.

• Time in business, especially if longer than two years
• Consistent revenue, increasing month over month
• A positive cash flow, with few if any annual losses
• A well-prepared business plan that shows your goals, details for improving profits, and plans for expansion (if applicable)
• A detailed explanation of how you’ll use the funds and pay the loan back over time
• Collateral, such as property, or personal guarantees of how you will cover the value of the loan in the event of an unforeseen business decline
  

Lenders generally don’t want to see recent bankruptcies, tax liens, or defaults on federal loans. If you have these on your credit report from years ago, be prepared to show evidence of how you’ve overcome or changed course.

Tips to improve your SBA loan chances with bad credit

Your credit score is a constantly changing metric that can show a bank you’re responsible enough to take on new credit. Because it changes often, there are steps you can take to improve it for the near future, possibly in time for your next SBA loan application.

Actions to take include:

• Pay off existing debts, or pay down as much as you can in the short-term
• Check your business and personal credit reports, correcting any errors you find
• Build your business credit, which can be used if your personal credit is weak
• Partner with a business advisor or community lender, who may be more open to businesses in your situation
• Start with a small loan (such as a microloan) and borrow only what you need
• Consider short-term loans, which can be paid back quickly to build business credit
  

Alternative paths if SBA loans aren’t an option yet

If, despite your efforts, you’re still not in a position to qualify for an SBA loan, you may still have choices.

Secured business credit cards require you to put down a cash deposit or collateral to access a line of credit, but they do offer credit benefits and liquidity you can use to grow your business.

Revenue-based financing and invoice financing agreements are like mini loans from the companies you get supplies and inventory from; they allow you to pay for your products in increments, instead of all at once.

Even small, short-term loans can build your repayment history and put you on track for a better credit score. This newer score may put you in the driver’s seat for a better, bigger SBA loan down the road.  

Credit isn’t everything

Can you access a business loan with poor credit? In some cases, yes! But being informed is part of the hard work needed to be sure you get the best terms possible. Come prepared with all the documents and a proper strategy for how you’ll use the money.

While you may not get approved for the full amount of your loan request, 28% of small businesses still get partial funding. Finding a lender that frequently services businesses like yours can greatly improve your chances. Ready to get started? Let Lendio help you with this first step of the journey.

Getting approved for an SBA loan is a big step and a huge relief for many small business owners. But approval doesn’t mean funds in hand. This guide breaks down what happens next, so you can stay ahead of the process and avoid delays.

If your SBA loan was just approved, take a moment to celebrate. You’ve passed the biggest hurdle in the process! But before those funds land in your account, you’ll need to complete one more important stage. SBA loan closing.

This stage is often misunderstood, especially by first-time borrowers. That’s why we believe it’s essential to provide small business owners with a clear understanding of what comes next.

So, in this guide, we’ll walk you through what happens after approval, what documents you'll need, and how long closing typically takes, so you can stay ahead and put your capital to work without delay.

Why SBA loans take time to close

SBA loans take longer to close than traditional loans because there’s more red tape. Since they’re partially backed by the government, lenders have to check every box (collateral, permits, compliance paperwork, etc.) before the funds are released.

Borrowers can support this process by staying proactive and organized, for example, by responding promptly and keeping documents up to date. This goes a long way towards avoiding unnecessary delays and keeps closing on track.

Please read our guide on what an SBA loan is to better understand how they work and why the closing process is more involved.

What happens after SBA loan approval?

After your SBA loan is approved, your lender will send over a Loan Commitment Letter. This lays out what needs to happen before closing can move forward, and usually covers:

• How much you’re approved to borrow, and at what rate
• The repayment plan you’ve agreed to
• Any collateral you’ll need to provide
• Additional requirements (e.g., insurance, permits, or licenses) that must be in place before funding

It’s worth going through this letter carefully. If anything looks off or unclear, ask your lender now rather than later. A quick conversation upfront can save you time and frustration down the line.

If you want to get a head start on your prep, read our guide on how business loans and taxes work to make sure you’re set up for tax season.

Key steps in the SBA loan closing process

The SBA closing process is pretty straightforward once you know what’s coming. While the exact steps vary depending on your loan and business, most borrowers go through a similar checklist:

1. Document collection and verification

Lenders often ask for fresh copies of key paperwork, even if you already submitted them earlier. This is because they need to confirm that your business still matches the terms of your approved loan.

In light of that, expect to resend things like:

• Personal and business financial statements
• Business licenses, permits, and insurance certificates
• Proof of business structure (such as Articles of Incorporation or an LLC Operating Agreement)
• Lease agreements or property-related documents (if real estate is part of the loan)

If anything is outdated or missing, your lender may pause the process. So, gathering these items in advance helps keep things on track.

2. SBA-specific documentation

After reviewing your paperwork, your lender will move on to the final SBA forms:

SBA loan authorization: This spells out the terms, things like the loan amount, interest rate, repayment schedule, collateral, and any extra conditions attached.

Proof of flood insurance (if applicable): If your loan involves real estate in a designated flood zone, flood insurance must be in place before closing. The policy must meet federal standards and name your lender (or the SBA) as the loss payee.

Environmental due diligence: If the loan includes commercial real estate (especially properties with past or current uses that may pose environmental risks), your lender may require a Phase I Environmental Site Assessment to identify any concerns.

Certification of use of proceeds (SBA form 1050): This form is required for all 7(a) loan disbursements. You and your lender must complete it at closing to confirm how funds will be used, consistent with the loan authorization. Supporting documentation (like invoices or wire confirmations) may also be required.

Other SBA forms and certifications: Depending on your loan type and business situation, you may be asked to complete additional documents, such as:

• SBA Form 159 (if you paid a broker or agent)
• IRS Form 4506-C (to verify business tax returns)
• Hazard insurance documentation (for collateral)
• Borrower certifications confirming no material changes since loan approval.

3. Legal and compliance requirements

Once the SBA-specific paperwork is out of the way, your lender will move on to the legal checks to confirm that your business is on solid legal ground and that everything meets SBA program rules.

You may be asked to:

• Sign legal documents that reflect the final loan terms
• Show that you’ve invested some of your own money into the business
• Provide proof that your location complies with zoning laws or environmental rules
• Back the loan with a personal guarantee or collateral

These steps are all about protecting both you and your lender while keeping everything above board.

Since SBA loans often require personal guarantees or assets as collateral, it’s worth understanding what happens if you default on an SBA loan and how to protect yourself.

4. Lender due diligence and final review

Right before closing, your lender will go over the details one last time to make sure everything lines up before funds are released. That could mean:

• Taking a second look at the title report, especially if real estate is involved
• Making sure all the collateral paperwork is in the file
• Following up with any lingering questions from underwriting

It’s routine, but important because it’s how lenders protect both sides before the loan goes live.

5. Signing the closing documents

This is the part where everything becomes official. You’ll go over the final loan agreement and sign documents like the promissory note, personal guarantee, and security agreement.

However, if real estate is part of your loan, there’s usually extra paperwork involved, like a deed of trust or lien filings. Some of those documents may need to be notarized. But don't worry, your lender will tell you what’s needed and when. These days, many lenders offer digital signing options to make things easier

6. Disbursement of funds

After you’ve signed all the paperwork and your lender has done a final review, the funds can be released.

How that happens depends on your loan and what it’s being used for:

Lump sum: For some loans, such as those primarily for working capital or refinancing existing debt, the full loan amount may be disbursed all at once directly into your business bank account.

In stages (draws): For projects involving construction, major renovations, or phased equipment purchases, funds are typically released in stages. This "draw" process allows the lender to monitor project progress and verify that funds are used appropriately at each phase.

Direct to third parties: Sometimes, the funds don’t go straight into your account. Depending on your loan terms, the lender might send the money directly to vendors like equipment suppliers or business sellers, or place it in an escrow account managed by a title company. This helps make sure the money gets used exactly as approved.

The typical timeline for fund disbursement is generally within 7–21 business days after the loan closing documents are signed. While some lenders, particularly those with highly streamlined or digital processes, may be able to release funds faster, it's prudent to anticipate this timeframe.

Get ready to put your capital to work

Once you close, the hard part is behind you. Now it’s time to focus on growth. It doesn't matter whether you’re purchasing new equipment, expanding to a second location, or managing seasonal cash flow; your loan is likely the key to moving your business forward.

Interested in a SBA loan? Lendio stays in your corner every step of the way, offering tools, expert guidance, and support when it matters most. If you're planning your next big move, our team is ready to help you make it happen. Start your SBA loan application today.

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 4.63%

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 (August 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 (August 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?

Apply with Lendio today!

Update: BayFirst announced they would be discontinuing the Bolt loan program on August 4, 2025. Read on for alternatives to the program.

You can’t always anticipate your business needs. So, when a new opportunity arises, and you need funding fast, it’s good to know all of your available options. One popular option was until recently the SBA Bolt loan. It offered flexible business financing in a more streamlined way than what you may expect from SBA funding. These loans were built for speed and could be your fast-track option for small business financing when minutes really matter.

What is an SBA Bolt loan?

The SBA Bolt was a type of SBA 7(a) loan that limited borrowers to no more than $150,000 but had fewer business loan requirements to meet when applying. It had a faster approval process, too, so was ideal for those in a crunch to get funding for a time-sensitive need.

The Bolt loan was an offering issued by CreditBench, the small-business lending division of BayFirst. However, on August 4, 2025, BayFirst announced that they would be discontinuing the Bolt loan program.

Was the Bolt loan an SBA loan?

Yes and no. The SBA loan program doesn’t offer an official Bolt loan program. Instead, the “Bolt” loan designation was created by BayFirst Financial to market its expedited small-dollar SBA 7(a) loans. So, the Bolt loan was an SBA 7(a) loan, but the name for this segment of small-dollar loans was created by BayFirst.

Key features of the SBA Bolt loan for small businesses

SBA Bolt loans weren’t the only fast, small business loans on the market, but they did stand out for a few reasons.

1. Loan amounts were significant enough to make a difference in a business, but not so large that they needed extensive documentation or collateral.
2. Processing time was just days, so businesses received funding much faster than the weeks or even months of traditional business loans.
3. The streamlined application process required much less paperwork. Most businesses would have the documentation they need on hand (or could access it quickly).
4. The shorter 10-year repayment period helped businesses plan for the near future and not worry about being saddled with decades of additional debt.
5. Competitive interest rates made the SBA Bolt loans a more stable option compared to “fast cash” alternatives.

Application requirements at a glance

While the SBA Bolt loans may have been quicker to get, they still had minimum requirements to meet. These loans were for legitimate, proven businesses that could demonstrate creditworthiness.

Businesses had to:

• Be in an approved industry for SBA loans (no life insurance, lobbying, or primarily gambling businesses, among others)
• Be U.S.-based
• Meet the SBA’s standards for “small”
• Operate for profit
• Have 2 years of demonstrated operations (some small startups may also qualify)
• Show proof of revenue and ability to repay
• Be unable to get financing on reasonable terms from other sources

Alternatives to SBA Bolt Loan

Now that the Bolt loan program has been discontinued, you might be wondering what your other options are. Here’s a comparison of the SBA Bolt Loan against other small-dollar SBA loan programs.

SBA Bolt Loan vs. SBA Express Loan

Closest in speed and simplicity to the SBA bolt loan would be the SBA Express loan, a small-dollar SBA loan meant to eliminate excessive paperwork and decisioning. Of other SBA loan program offerings, the SBA Express loan reduces the number of forms and procedures required, and allows lenders to use more of their own loan analysis, procedures and documentation than other SBA loans.

SBA Bolt loans vs. other small business loan options

SBA Bolt loans were fast, flexible, and available to businesses that may have been shut out of other financing opportunities. Now that they have been discontinued, take a look at some other options available. Here’s how they compared to common business funding programs used by companies today:

• Traditional SBA 7(a) loans: Offer much larger amounts (up to $5 million) and broader use cases, but the approval and funding take much longer (weeks or more). Paperwork and documentation needs can be extensive.
• Term loans: Offer a lump sum that’s repaid over a set period, usually with a customizable term, and for larger amounts. Approval process can take longer, require physical collateral, and may not be guaranteed by the SBA or partner banks.
• Lines of credit: Offer flexible funding to borrow from again and again, instead of the single, one-time lump payout of a Bolt loan. Comes with a higher interest rate in most cases and can be harder for the average small business to qualify for. ‍
• Revenue-based financing: Provides upfront cash that is rapidly repaid through a percentage of daily sales. Comes with a higher interest rate and lacks a fixed repayment structure that helps businesses budget better.

Many SBA loan portals let you shop around to see what rates, terms, and limits you qualify for. Don’t be afraid to ask questions about these various lender offers so you know how the loan process will look and to ensure you get the best service – and deal!

Lendio makes a great first step in the process, showing you the loans you’re likely to qualify for, rates available, and the loan terms you can expect before you fill out all the paperwork.