SBA 7(a) Loan Program

What is it for?

The 7(a) Loan Program is the SBA’s most common form of financial help for small businesses. A 7(a) loan is provided by a bank, credit union, or another lender with the SBA guaranteeing the loan. These loans can be used for a wide variety of purposes including:

  • Long-term working capital for operating expenses, accounts payable, and inventory
  • Short-term working capital for seasonal financiering or construction financing
  • Revolving funds based on the value of existing inventory and receivables
  • Purchase of machinery, furniture, and equipment
  • Purchase of buildings or land
  • Construction of new facilities or renovation of existing facilities
  • Purchase of an existing business or start of a new business
  • Refinancing of existing business debt


In order to evaluate your eligibility for a 7(a) loan the SBA looks at three factors; what a business does to earn its income, the character of the owners, and where the business operates. In addition, businesses must:

  • Be operated for profit
  • Do business or propose to do business in the United States
  • Be a small business
  • Have reasonable invested equity
  • Use other available financial resources before seeking a SBA Loan
  • Have a demonstrable need for the loan
  • Use the funds for a sound business purpose
  • Not be delinquent on any existing debt to the US government

Loan Structure

A 7(a) can be as large as $5 million. The SBA will guarantee up to 85 percent on loans of $150,000 or less and guarantee up to 75% on loans larger than $150,000. With the 7(a) Loan Program, the SBA will not guarantee more than $3.75 million. There is a guarantee fee paid by the lender when the SBA guarantees the loan. The lender can choose whether or not to pass this fee on to the borrower. The final interest rate is decided by the lender but the SBA does set maximums.