What Is an SBA 7(a) Loan?

Definition and Examples of an SBA 7(a) Loan

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An SBA 7(a) loan is a financial tool designed by the Small Business Administration (SBA) to get money into the hands of small business owners. An SBA 7(a) loan isn't a loan directly from the SBA, rather, the SBA helps small business owners secure loans by guaranteeing a portion of the amount borrowed, capping interest rates, and limiting fees.

Keep reading to learn more about what SBA 7(a) loans are, the different types that are available to small businesses, and how to get one.

New Paycheck Protection Loan Funding for 2021

The 2020 Paycheck Protection Program (PPP) loans are 7(a) loans to help small businesses affected by the ongoing public health and economic crisis. The PPP program was reopened for 2021 to include new loan availability and additional funding for businesses currently receiving PPP loans. First-time applications and second-time applications may be submitted through May 31, 2021. There is also new information about loan forgiveness options. Check with the SBA or your lender about the availability of these relief efforts.

What Is an SBA 7(a) Loan?

The 7(a) loan program is the SBA's primary method of assisting small businesses in the U.S. When you apply for an SBA 7(a) loan, you work with a lender and the SBA participates by guaranteeing a portion of the loan amount. This guarantee from a government agency helps businesses acquire funds, even if they may not have otherwise qualified for a business loan.

Running a small business can be tough, especially in times of uncertainty and loss of revenue. One port in the storm could be an SBA loan. In times of hardship, this "do everything" loan could help you get back on your feet. These loans can be used to acquire business essentials like real estate, equipment, working capital, and inventory.

The term "7(a) loan" is a catch-all term that refers to more than half a dozen different types of SBA 7(a) loans. Each loan is designed to meet a different need. Since they address different needs and businesses, 7(a) loans vary in their loan amounts, SBA guarantees, and other term details.

How an SBA 7(a) Loan Works

The stated purpose of SBA 7(a) loans is to encourage lenders to provide fair loans to businesses "that might not otherwise obtain funding on reasonable terms and conditions." In the fiscal year 2020, the SBA facilitated nearly 42,000 7(a) loans. Combined, the value of these loans totaled over $22 billion.


The term "7(a) loan" comes from Section 7(a) of the Small Business Act of 1953, which first authorized the SBA to both provide and guarantee loans to small businesses in the U.S.

Once a business owner finds an SBA-approved lender that they want to work with, they can begin the process of obtaining an SBA loan. Most SBA 7(a) loans allow businesses to borrow up to $5 million. The SBA will guarantee 85% of loans up to $150,000 and 75% of loans greater than $150,000.

The SBA sets a maximum interest rate, but you and your lender can negotiate within that limit. Interest rates are based on the prime rate, the size of the loan, and the maturity of the loan. In addition to interest rate caps, SBA loans also protect businesses from certain fees. However, SBA loans also come with prepayment penalties that cover the first three years of the loan.

How to Get an SBA 7(a) Loan

The SBA does not directly lend money to small businesses in the form of a 7(a) loan. You must first find an SBA-approved lender. The lender will ask you to complete an application for a 7(a) loan, and you will work with the lender on the paperwork required by the SBA.


In addition to completing a borrower information form and an SBA loan application, you will also need the typical documents for a business loan, including your personal financial statement and financial information about your business.

For your business to be eligible for a 7(a) loan, you must:

  • Be defined as a small business by the SBA (depending on what industry you operate in, these standards may correspond to a number of employees or the value of average annual revenue)
  • Operate for profit
  • Operate (or intend to operate) in the U.S. or its territories
  • Have the resources to invest your assets in your business, and you must show that the loan is for a sound business purpose
  • Have used other financial resources before applying for this loan

Most types of businesses are eligible, but there are exceptions. Businesses can't receive SBA 7(a) loans if they deal in illegal activities, loan packaging (or any kind of lending), speculation (or any kind of investment), multi-sales distribution, rare coins, and stamps, or gambling. Nonprofits are also ineligible, including all charities and religious groups.

One exception is the additional PPP loans made available through the American Rescue Plan, which opened the door for nonprofit organizations to apply.

How Long Does It Take to Get an SBA 7(a) Loan? 

The turnaround time for most 7(a) loans is five to 10 business days, but every case is unique. For those in a hurry, the SBA Express loan has an accelerated turnaround time of 36 hours.

Types of SBA 7(a) Loans

The SBA lists nine different kinds of 7(a) loans on its website. They're all designed to meet different needs, so businesses in some industries may find that one 7(a) loan is better suited for them than others.

Standard 7(a)

Most small businesses will qualify for this kind of 7(a) loan. These loans max out at $5 million. The SBA will guarantee 85% of loans up to $150,000 and 75% of loans greater than $150,000.

7(a) Small Loan

These loans max out at $350,000, but otherwise have the same features of the Standard 7(a) loan.

SBA Express

This is the expedited loan for businesses that need a short turnaround. The SBA says it will respond to your application within 36 hours. The maximum loan is $350,000, and the SBA will only guarantee up to 50% of the loan. It can be used for a revolving line of credit for up to 7 years.


Those affected by disasters may want to check out the SBA's Express Bridge Loan Pilot Program. This program is designed to supplement the SBA's direct disaster loan program. It gives an expedited SBA-guaranteed bridge loan of up to $25,000 to small businesses in places that have been declared a disaster area by either the President or the SBA.

Export Express

This program is for exporters who need loans and lines of credit up to $500,000. The lines of credit last for up to seven years. The SBA will guarantee up to 90% of loans under $350,000 and 75% of loans that exceed that amount. This also has an expedited turnaround time of 24 hours.

Export Working Capital

This loan is for businesses that need additional working capital to support their export sales. Loans are available through the Export Assistance Center for up to $5 million. The SBA can guarantee up to 90% of the loan, no matter the size of the loan. These lines of credit last for one year or less.

International Trade

These are long-term loans to businesses that are either expanding because of export sales or need to modernize to address the adverse effects of imports from foreign competition. These loans are similar to the Export Working Capital loans in size and guarantees, but they last much longer—10 years for working capital, machinery, and equipment, and up to 25 years for real estate.

Veterans Advantage

These low-fee loans are available to businesses that are at least 51% veteran-owned and controlled (spouses and widows of veterans count toward this requirement). Veterans may apply to other SBA loans and then apply the Veterans Advantage benefits to those loans.


CAPLines loans follow the general outline of the Standard 7(a) loan, but rather than a lump-sum loan, CAPLines extends an ongoing line of credit. This line of credit is meant to help small businesses meet short-term and cyclical working capital needs. There are four lines of credit covered by this program, all of which last for up to 10 years except the Builders CAPLines:

  • Seasonal: This is designed for businesses that experience seasonal ebbs and flows, such as a retail store that needs to hire more workers during the holiday shopping season.
  • Contract: This is designed to provide flexibility for businesses that may need to ramp up resources and staff to meet an influx of contract jobs.
  • Builders: This is designed for small general contractors and builders that need help meeting material and labor requirements. Unlike the other three CAPLines, Builders CAPLines only last for up to five years.
  • Working: This is designed for businesses that have cyclical growth or recurring short-term needs. Money may be borrowed to obtain short-term assets, and the loan is repaid when those short-term assets are converted to cash.

Key Takeaways

  • An SBA 7(a) loan is a loan for qualified small businesses in the U.S. that is partially guaranteed by the Small Business Administration.
  • There are different kinds of SBA 7(a) loans that are designed to meet unique needs in certain industries.
  • Businesses generally qualify for an SBA 7(a) loan if they are a small business that operates for profit in the U.S.
  • The terms of the loans vary, but most Standard 7(a) loans allow for up to $5 million to be borrowed on a timeline of 10 years.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Small Business Administration. "SBA Administrator Isabella Casillas Guzman’s Statement on President Biden Signing the PPP Extension Act of 2021 Into Law." Accessed April 1, 2021.

  2. House Committee on Rules. "Consolidated Appropriations Act 2021," Page 2042ff. Accessed April 1, 2021.

  3. Small Business Administration. "Types of 7(a) Loans." Accessed April 1, 2021.

  4. Congressional Research Service. "Small Business Administration 7(a) Loan Guaranty Program," Page 2. Accessed April 1, 2021.

  5. Small Business Administration. "SBA Achieves Historic Small Business Lending for Fiscal Year 2020." Accessed April 1, 2021.

  6. Small Business Administration. "Terms, Conditions, and Eligibility." Accessed April 1, 2021.

  7. Small Business Administration. "Table of Small Business Size Standards Matched to North American Industry Classification System Codes," Page 1. Accessed April 1, 2021.

  8. U.S. Congress, "American Rescue Plan Act of 2021," Page 78. Accessed April 1, 2021.

  9. Small Business Administration. "Express Bridge Loan Pilot Program: Program Guide," Page 3. Accessed April 1, 2021.

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