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Types of SBA Loans
Business Capital

Types of SBA Loans

17 min read

Small businesses provide life and variety to our economy, but they face many unique challenges. From creation to capital, and growth to recession, small businesses often need help to stay afloat. 

Thankfully there are financial lifelines for small businesses that exist to level the playing field. Because these companies provide life and variety to our economy, the U.S. Small Business Administration(SBA) provides several loan programs and other resources for American small businesses.

The SBA loan program is a route of funding that is designed by the Small Business Administration and extended through preferred lenders (usually banks and credit unions) exclusively for small businesses. Small businesses can be defined in many ways and have diverse needs for funding, so the Small Business Administration provides several different loans with different criteria.

What is an SBA preferred lender? An institution that can issue SBA guaranteed loans on their own authority without needing lengthy SBA approval.

SBA loans are generally very popular and can give small business owners terms that regular lenders’ loans can’t match, but they’re also trickier to get and may come with more parameters for application and use. Additionally, SBA loans can take much more time to apply for and obtain. 

General SBA loan requirements

  • Business or personal credit score of 680 or better
  • The business must be unable to acquire a private business loan
  • Must be a small business defined as approximately 500 employees or fewer
  • Each loan type has its own criteria (for example, a disaster loan is only available in response to a physical or economic catastrophe)

How to apply for an SBA loan: Research the following SBA loans, gather your business documentation, then check with your bank to see if they are a preferred lender or contact your local SBA office.

Types of SBA loans

With recent developments of the COVID-19 pandemic, the Small Business Administration rolled out the highly popular Paycheck Protection Program loan. First round funding was quickly exhausted, and many small business owners were unaware of other SBA alternatives for business capital that might meet their needs if they were unable to secure a PPP loan. 

Types of SBA Loans
Title Best for Loan amount Term length Interest
SBA 7(a) Working capital, refinancing, expansion, purchasing $5 million 10-25 years 7.25-9.75%
CDC/SBA 504 Commercial real estate, equipment financing $20 million 10 or 20 years 4.71-5.06%
SBA CAPline Program Seasonal or short-term $5 million 5 or 10 years 5.75-8.25%
SBA Export Export business expansion $5 million 3-25 years 5.75-10%
SBA Microloan Home businesses, nonprofits $50,000 Up to 6 years 8-13%
SBA Disaster Loan Physical catastrophes or economic injury $2 million 3-30 years 4-8%

We’ve broken down the six types of SBA loans, as well as other forms of business funding to help you determine the best SBA loan type for your specific needs. 

SBA 7(a) Loan

The SBA 7(a) loan is the most common and multipurpose small business loan. SBA 7(a) loans can be used for a variety of reasons and therefore appeal to nearly all small business owners. These loans are also desirable for low interest rates, long terms, and the large amount that can be requested–up to $5 million. The 7(a) loan cannot be used to pay off debt or bills. These loans are not available to nonprofits, or businesses that deal with lending, rentals, or investing. 

Types of SBA 7(a) loans include:

  • SBA 7(a) Standard Loan: The basic 7(a) loan for any qualifying small business with 25 year terms and a $5 million limit. 
  • SBA 7(a) Express Loan: The Express Loan is a variation of the 7(a) loan which provides a response within two days, limits funding to a loan amount of $350,000, and has a higher interest rate. 
  • SBA 7(a) Community Advantage Loan: A variation of the 7(a) SBA loan which is designed for businesses in underprivileged areas that do not meet the regular qualifications for a 7(a) loan. There are relaxed requirements and a $250,000 lending cap. 
  • SBA 7(a) Veterans Advantage Loan: A loan for businesses owned by veterans, active duty, active reserve, or spouses/widows of such individuals. Limits are up to $5 million but may include a guarantee or down payment. 

Best for

Best for general purpose capital, equipment financing, purchasing businesses, debt refinancing, real estate, and expansion. 


Requirements for an SBA 7(a) loan are a credit score of at least 680, no recent bankruptcies or foreclosures, and the business must be at least two years old. If the funding is for the purchase of real estate, equipment, or another business then you must be able to provide the 10% downpayment. Collateral is usually required in the form of business assets. 

Rates & Terms

Traditional SBA 7(a) loans are up to $5 million, with Express loans capping at $350,000 and Advantage loans at $250,000. SBA 7(a) loans are generally 25 year terms, but smaller loans may be for 10 year terms. 

CDC/SBA 504 Loan

For a CDC/SBA 504 Loan, the Small Business Administration teams up with a local community development corporation (CDC) to help fund real estate purchasing or building for small businesses. The CDC supplies 40% of the loan, the SBA lender 50%, and the business is responsible for the 10% down payment. 

Best for

SBA 504 loans are best for small businesses looking to buy or build commercial real estate for expansion or a new location. Particularly useful for small businesses looking to establish strong ties with the local community. 


For the building to be financed, the small business needs to occupy at least 51% of the space. General SBA requirements must be met, such as the 680 credit score and company size, as well as any local requirements of the community development corporation which may include a number of jobs provided, public policy goals, and community outreach. 

Rates & Terms

The lender side of the loan will be determined by the bank issuing the loan, but the CDC rates and terms are set by the SBA. A 10 year loan will have a 4.85% interest rate, while a 20 year loan will issue a 5.07% interest rate.

SBA CAPLine Program

The Small Business Administration offers five different lines of credit for small businesses who may need access to capital during cyclical seasons of need or for short term projects. The lines of credit may be revolving or fixed according to the type and need of the business. There are four main types of these credit lines: 

  • Contract:  for covering the costs of contracts
  • Seasonal: for covering seasonal increases in costs such as labor or inventory
  • Builder: for covering construction and renovation costs
  • Asset-based: for working capital and converting assets to fluid cash

Best for

An SBA CAPLine best for businesses that may need flexible funding options, especially for short-term projects or unknown expenditures. 


Businesses must meet general SBA requirement criteria to qualify for a CAPLine, but they will also need $100,000 annual revenue. Depending on the type of CAPLine credit line you may need to meet additional specifications, such as demonstrating your ability to complete a contract or generate seasonal income. 

Rates & Terms

Revolving or fixed credit lines up to $5 million. Builder lines are 5 year terms, with all other CAPLine lines of credit lasting 10 years. Interest may be fixed or variable, and can land anywhere between 5.25-8.75% APR. 

SBA Export Loans

In an effort to support American businesses and build export commerce, the Small Business Administration created the SBA Export loan program. Small businesses that wish to expand into international markets or to support their export trade can apply for three types of export loans: 

  • SBA International Trade: for exporting businesses or those negatively impacted by changes in international imports
  • SBA Export Working Capital: for obtaining working capital to cover expenses due to purchases from foreign customers
  • SBA Export Express: a smaller business loan (up to $500,000) with faster turnaround time

Best for

SBA Export loans are best for small businesses that operate internationally or want to expand into international markets. 


Small businesses looking for an export loan only need to be in operation for one year but will be required to front a 20% guarantee for the loan. Businesses will also be required to demonstrate their successful involvement in international markets. 

Rates & Terms

Export loans are up to $5 million, except the express loans which are $500,000 total. The working capital loans are up to 3 years, 7 years for express loans, real estate up to 25, and all other export loans at 10 year terms. The interest rates vary greatly from 6.75-11% APR. 

SBA Microloan Program

SBA Microloans are smaller loans specifically for small and starting businesses that are serviced through nonprofit lenders. These microloans cap out at $50,000 but most are under $15,000. 

Best for

SBA Microloans are best for small businesses needing a small amount of cash for a specific, short-term need. 


General SBA requirements must be met, and any specification criteria for the intermediary lender to qualify for an SBA Microloan. 

Rates & Terms

SBA Microloans are up to 6 year terms, with slightly higher interest rates from 8-13%.

SBA Disaster Loan

SBA Disaster loans are designed to support small businesses dealing with the fallout of any kind of disaster. Physical disasters, such as floods, tornadoes, earthquakes and other acts of God that may cause damage or prevent normal business operations may require funding for small businesses to survive. Economic injury can also be covered, such as the recent complications due to COVID-19 quarantines. 

Best for

An SBA Disaster Loan is best for small businesses dealing with financial difficulties due to a disaster or catastrophe such as physical disasters or economic injury such as a pandemic.


Unlike other SBA loans, the SBA Disaster Loan program is provided directly by the SBA rather than an intermediary lender. One of the major requirements of a disaster loan is that you have to be in operation in a current disaster zone and prove that you’ve been affected. Collateral will also be required for loans over $5,000. 

Rates & Terms

If you have alternative credit available your maximum loan term for an SBA Disaster Loan will be 3 years, but otherwise the disaster loans can be up to 30 years. Interest rates are between 3-7%, and borrowing loan amount caps at $1.5 million depending on needs. 

Other types of business funding

Term bank loans

Term loans are the traditional bank loans you’d think of. Terms are very straightforward: a set amount of money, paid back with interest on a payment schedule. Term loans are available through banks or online lending platforms. Banks are generally going to offer better terms, but may take a little longer to get your capital. Online lenders can provide rapid funding, but may charge higher interest and give shorter loan term lengths.

You can secure short-term loans, (which are typically paid back in less than a year), through traditional banks or alternative lenders. These loans may require more frequent payments with weekly or even daily schedules. 

Best for

Businesses needing ongoing capital, whether for improvements, expansion, or acquiring a new business.


Depending on your bank, you may need to meet certain criteria for the age of your business. Online lenders usually require 1-2 years in business. Your business credit score will be factored in to determine how much you may qualify to borrow and the interest rate assigned to your loan.

How to apply for a term loan

Start first with your existing bank, as they may be able to offer you loyalty terms that are more competitive. Online lenders make application as easy as a few clicks, and we’ve gathered a handful of the most helpful online lenders in this chart.

Emergency bridge loans

In the event of an emergency you may not be able to qualify for or obtain a SBA disaster loan, but there are additional emergency funding options. Bridge loans are a kind of temporary financing intended to cover capital shortfalls until a company secures more permanent funding or recovers from unforeseen circumstances. 

The most common types of bridge loans include operating and mortgage loans, though they can also be used to allow businesses to make quick moves like strategic acquisitions. As bridge loans are short-term, small businesses may be able to qualify more easily. However, they do tend to carry higher interest rates.

Small business grants

Almost any business can access funding through small business grant programs. The Small Business Administration regularly delivers grants to companies involving research and development, exports, and veteran mentorship (learn more about SBA grants). is another go-to resource for accessing funds from federal grants. Depending on your company size and industry, you may be able to find grants specific to your business. For example, grants are often available to minority business owners and technology companies.

Access and flexibility in business funding can completely change the future of your company. Divvy has both answers and options for you. Reach out today for a Divvy demo and to find out how you can spend smarter.

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