How to Apply for an SBA Loan in 5 Steps

Randa Kriss is a lead writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured in The Washington Post, The Associated Press, MarketWatch and Nasdaq, among other publications. She has also hosted a webinar as part of the SBA's 2024 National Small Business Week Virtual Summit. Randa is passionate about helping small-business owners make educated financial decisions, especially when it comes to affordable funding. She is based in Chicago.

Assigning Editor

Sally Lauckner
Assigning Editor | Small business

Sally Lauckner is an editor on NerdWallet's small-business team. She has over 15 years of experience in print and online journalism. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content and specializing in business financing. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She is based in New York City.

Fact Checked Co-written by Rosalie Murphy Lead Writer

Rosalie Murphy
Lead Writer | Small business, business insurance, business banking

Rosalie Murphy is a small-business writer at NerdWallet. Since 2021, she has covered business insurance, banking, credit cards and e-commerce software, and her reporting has been featured by The Associated Press, MarketWatch, Entrepreneur and many other publications. Rosalie studied journalism at the University of Southern California and holds a graduate certificate in Quantitative Business Management from Kent State University, where she's now pursuing an MBA. She is based in Chicago.

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Table of Contents

MORE LIKE THIS Small-Business Loans Small Business

Table of Contents

MORE LIKE THIS Small-Business Loans Small Business

U.S. Small Business Administration loans typically offer long repayment terms and low interest rates. As a result, these small-business loans are among the most affordable and sought-after forms of funding for entrepreneurs — but SBA loan applications are also among the most rigorous.

By taking the time to understand the process and your loan options, however, you’ll put yourself in the best position to apply and get approved.

Here are five steps to apply for an SBA loan.

How much do you need?

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

1. Choose the right SBA loan for your needs

There are three main SBA loan programs : the 7(a) loan program, the CDC/504 loan program and the microloan program.

SBA 7(a) loans are issued by participating lenders, like banks and credit unions. 504 loans, on the other hand, come from three sources — a third-party lender, a Certified Development Company (CDC) and the borrower. Both of these loan types are partially-guaranteed by the SBA.

With microloans, the SBA funds intermediary lenders (typically nonprofits and community organizations) directly and they completely process, distribute and administer the loans themselves.

Here’s an overview of these three SBA loan options:

Up to $5 million.

10 years for equipment, working capital or inventory loans; 25 years for real estate.

11.5 % to 15 %

Working capital, debt refinancing, equipment purchases, changes of ownership.

Up to $5 million (up to $5.5 million for select projects).

10, 20 or 25 years, based on the remaining useful life of the property being financed.

Rates are tied to the 10-year U.S. Treasury notes and are typically around 5% to 7% of the amount financed.

Purchase or upgrade of large, fixed assets.

Up to seven years.

Rates vary, but typically range from 8% to 13%.

Working capital; purchase of business supplies and equipment.

Ultimately, the right SBA loan for you will depend on why you need funding, how much funding you need and your qualifications, among other factors.

Advertisement

OnDeck - Online term loan

Funding Circle - Online term loan

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. credit score

Min. credit score

Min. credit score

2. Determine if you qualify for an SBA loan

SBA loan requirements will vary based on your loan program and lender — but you’ll also have to meet a set of standard criteria laid out by the SBA. These qualifications include:

Must be a for-profit business operating in the U.S. Must be a small business, as defined by the SBA. Must be able to demonstrate the need for the loan funds and show how you’ll use them. Must have sought out other forms of financing before turning to an SBA loan. Must be able to show that you’re creditworthy and that you can repay a loan. Cannot be delinquent on any existing government loans.

If you can meet these requirements, you’ll then need to confirm that you can qualify with an SBA lender. Because 7(a) and 504 loans are issued by traditional lenders, they tend to have more stringent criteria than microloans. You’ll typically need:

Good credit (score of 650 to 680 or higher). Strong revenue. Multiple years in business.

For microloans, on the other hand, you may be able to qualify with a credit score of 620 or higher and less than two years in business.

If you don’t think you can qualify for an SBA loan, you might pivot your search to online lenders. These companies typically have more flexible qualification requirements and faster funding times compared to bank and SBA lenders.

3. Find an SBA lender

You’ll want to find an SBA lender that has sufficient experience processing and issuing SBA loans — and one that offers the loan type you’re looking for.

To start, you can try reaching out to a bank or financial institution with which you have a previous relationship. Popular small-business banks like Bank of America , Wells Fargo and Chase , for example, each offer 7(a) and 504 loans.

You can also browse a list of active CDCs and a list of active microlenders on the SBA’s website.

To connect with lenders directly, you can use the SBA’s lender match system . With Lender Match, you’ll answer a few questions about your business and in two days, you’ll receive an email with possible lender matches. You can then contact the lenders for more information and compare their rates, terms and fees.

4. Prepare your SBA loan application

The details of your SBA loan application will vary slightly based on your lender and loan type. In general, however, you’ll need to provide the following documentation:

SBA-specific forms

SBA Form 1919, Borrower Information Form. SBA Form 912, Statement of Personal History. SBA Form 413 , Personal Financial Statement.

SBA Form 148, Unconditional Guarantee (or the lender’s equivalent). The SBA requires that anyone with 20% or more ownership in the business provide an unlimited personal guarantee. Owners with less than 20% ownership may provide a full or limited guarantee (SBA Form 148L) [0]

U.S. Small Business Administration . Lender and Development Company Loan Programs.

Financial statements

Current income statement and balance sheet. Income statements and balance sheets from the previous three years. Cash flow projections. Three years of business tax returns (or all tax returns to date). Three years of personal tax returns. Existing debt schedule, if applicable. Detailed listing of all collateral.

Supporting documents

Business certificates or licenses. Loan application history. Resumes for each business owner. Business overview and history. Business lease.

If you’re using your SBA loan to buy a business , finance a franchise or purchase real estate, you may be required to provide additional documentation.

5. Submit your SBA loan application package

Once you’ve gathered all of your documentation, it can be helpful to have a mentor or business advisor look over your loan application in its entirety. They can point out missing pieces of information or help you strengthen any weak spots to increase your chances of approval.

Then, you’ll submit the application to your SBA lender. The lender will underwrite your application and decide whether or not to approve the loan.

If you’re approved, the lender will send your application to the SBA for review. During this process, the SBA may re-request documents or ask for additional information. Once you’re approved by the SBA, you’ll receive an initial commitment of your loan terms and you’ll start the closing process.

It’s important to note that not all SBA lenders have to send their applications to the SBA for review. Preferred lending partners, or PLPs, can make final credit decisions without SBA approval, thereby expediting the application process [0]

Congressional Research Service . Small Business Administration 7(a) Loan Guaranty Program.

Microloans are also not subject to SBA review, as these intermediary lenders have the authority to process, distribute and close loans on their own.

Overall, it can take anywhere from 30 to 90 days to get an SBA loan . PLP and microlenders can likely offer the fastest timelines, but SBA loans will still be slower to fund than many other small-business loan options.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.

A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.

About the authors

You’re following Randa Kriss
Visit your My NerdWallet Settings page to see all the writers you're following.

Follow for more nerdy know-how Keep up with your favorite financial topics on NerdWallet.

Randa Kriss is a small-business writer who joined NerdWallet in 2020. She previously worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona College. See full bio.

You’re following Rosalie Murphy
Visit your My NerdWallet Settings page to see all the writers you're following.

Rosalie Murphy is a small-business writer at NerdWallet and an MBA candidate. See full bio.

On a similar note.

One blue credit card on a flat surface with coins on both sides.

Smart money moves for your business Get access to business insights and recommendations, plus expert content.

Sign up for free MORE LIKE THIS Small-Business Loans Small Business

Best Small-Business Loans

by Randa Kriss Compare loan options and find the right funding for your small business.

Business Line of Credit: Compare the Best Options

by Randa Kriss

A business line of credit can finance short-term expenses, like payroll or inventory. Both traditional and online lenders offer business lines of credit.

Small Business Financing Options

by Randa Kriss , Olivia Chen

The top sources of small-business financing include loans from banks and online lenders, as well as small-business grants.

NerdWallet Home Page Finance Smarter Credit Cards Financial Planning Financial News Small Business

Download the app

QR code for downloading the app

Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

NerdUp by NerdWallet credit card: NerdWallet is not a bank. Bank services provided by Evolve Bank & Trust, member FDIC. The NerdUp by NerdWallet Credit Card is issued by Evolve Bank & Trust pursuant to a license from MasterCard International Inc.

Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

NerdWallet Compare, Inc. NMLS ID# 1617539

California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812

Insurance Services offered through NerdWallet Insurance Services, Inc. (CA resident license no.OK92033) Insurance Licenses

NerdWallet™ | 55 Hawthorne St. - 10th Floor, San Francisco, CA 94105