Taking your business to the next level with an SBA loan

The SBA loan is ideal in giving you access to capital so you can invest it into your growing business. From working capital or improvements including renovations, technology and staffing, business acquisitions, real estate purchases and more, your business will get the extra boost it needs to prosper. It is often difficult for any other type of business loan to compete with an SBA loan due to their prime interest rates, terms, and borrowing limits. These advantages make SBA loans challenging to qualify for because of the strict requirements and criteria. Depending on what type of loan product you are applying for, the requirements and terms can vary so be sure your lender explains what they will need from you in order to qualify.


What is an SBA loan?

A Small Business Administration (SBA) loan is a government small business loan that are great in helping to cover the startup costs, expansions, real estate ventures and even more. SBA financing is issued by a private lender but backed by the federal government.Applications for SBA loans are not sent directly to the SBA. Applicants will apply through the following financial institutions:

  • Commercial Banks
  • Credit Unions
  • Direct Biz Funding

What makes an SBA loan different than all other business loans is that the SBA guarantees up to 85% of loans up to $150,000 and up to 75% of loans over that amount and up to $500,000. This means that even if the borrower were to default on the loan, the financial institution would still make 85% or 75% of the borrowed funds.

Funding Amount

$50K – $10M

Funding Terms

3-25 years


Starting at 3.75%


3-5 weeks

What are the advantages of an SBA loan?

SBA loans tend to carry higher borrowing limits and longer terms. In addition to making capital more affordable, the lower interest and lower terms prevent businesses from damaging cash flow in the process. Investing in expensive products can call for a need to cut expenses or put significant plans on hold to make monthly payments. With an SBA loan, there is peace of mind when covering operational costs. SBA loans are the ideal choice for businesses looking to maximize their return on investment. Overall, an SBA loan affords a business the following:

  • Competitive Rates
  • Longer Terms
  • Lower Fees

What are the disadvantages of an SBA loan?

  • While serving as one of the most convenient and advantageous loans, the SBA loan also carries the strictest requirements. Hopeful borrowers might assume that since the SBA guarantees a large percentage of the loan, they should therefore be easier to access than a Business Term Loan. A financial institution still stands to lose some money in the event of a loan default. Thus, they are only slightly more generous with SBA Loan applications. Each institution creates its criteria for approval so there is also a lack of tangible, universal requirements. Individual institutions might favor specific industries or types of businesses, thus requiring different criteria. For example, banks are particularly biased towards established companies with massive bank balances.
  • Aspiring borrowers must be warned that applying for SBA Loans requires patience. With significant criteria to be met, it could be at least three months before approval is determined. Applicants might have to meet with multiple institutions before being accepted and even then, they may even be told to reapply when their finances have improved.
Program Loan size Purpose
SBA (7) A Loans Up to $5 million; repayment terms of up to 25 years As the most popular type of SBA loan, this loan can be used for hiring additional staff, equipment purchases, paying off existing debts, ordering bulk inventory, etc. Interest rates range from 5% – 10%. There is a 1.7% fee for loans up to $150K and a 2.25% fee for loans greater than $150K. This fee might be presented as part of the total cost of the loan along with an origination fee or loan packaging fee. This type of loan may not be used for purchasing a building that will be leased to another business, reimbursement of a business owner for a previous investment in the business, and repaying debts owed to the United States government.
SBA Express Loans Up to $500,000 Fast funding for working capital, expansion and real estate and equipment purchases.
SBA 504 Loans Up to $5.5 million; repayment terms of up to 20 years This type of loan can be used to purchase long-term, fixed assets like land, machinery and facilities, and commercial real estate. In most cases, the assets are used for collateral.

Interest rates range from 5% – 6%. Total fees can add up to 3% of the loan amount, and a down payment of approximately 10% is required. With this type of loan, the purpose for use of the funds must be specified. In turn, this will determine the borrowing limit and overall approval.

If the loan is used for the creation of job positions, one job must be created for every $65k borrowed. Manufacturing businesses must create one job for every $100k borrowed; in this case there is a borrowing limit will of $5 million.

If the loan use is related to public policy (i.e., business district revitalization, minority business development, expansion of women-owned businesses), the borrowing limit is $5.5 million.

If you own a small manufacturing business, you must create or retain at least one job per $100k guaranteed by the SBA. Your loan must also be used for purposes related to public policy. If the aforementioned criteria are met, the borrowing limit will be $4 million.
SBA Microloans Up to $50,000; repayment up to 6 years This type of loan can be used for working capital, inventory, supplies, equipment, and machinery.

Interest rates range from 8% – 13%. This loan tends to carry no fees.
SBA Economic Injury and Disaster Loans (EIDL) Up to $2 million; repayment up to 30 years This type of loan is excellent for repairs of physical damage due to a declared disaster like floods or tornadoes and covers operating expenses.

Interest rates will be 3.75% with the first monthly payment deferred a full year from the date of the promissory note. There are no fees, including prepayment penalties. Collateral is not required.

Unlike other SBA Loans, an EIDL cannot be accessed through banks and other third-party lenders. Businesses must apply directly on the SBA website.

Before the CARES Act, eligible businesses needed proof that they were unable to obtain loans or credit from other sources and did not have enough cash and/or credit to cover operational expenses on their own. This requirement has since been waived. Thus, someone with an existing credit line could still theoretically be approved for an EIDL.

While an EIDL has traditionally only been available for registered entities (LLC, corporations, etc.), they can now be accessed by sole proprietors, tribal businesses, cooperatives, and independent contractors.

EIDLs are only available for companies with up to 500 employees. Application for an EIDL under $200,000 can be approved without a personal guarantee.
SBA Community Advantage loans Up to $250,000 Normal business purposes; cannot be used for revolving credit.
SBA Export Working Capital loans Up to $5 million Working capital to support export sales.
Up to $500,000 Expedited funding to enhance a business’s export development.
SBA International Trade loans Up to $5 million Long-term funding to expand export sales or modernize to contend with foreign competitors.
  • Lowest interest rates
  • Longest repayment terms
  • Use for a variety of business services
  • Lengthy approval process
  • Large amount of paperwork
  • Might require collateral
  • Good-excellent credit required

How I apply for an SBA Loan?

Direct Biz Funding has secured partnerships with selected SBA lenders which guarantees the approval and distribution of loans in as little as three weeks.

Step 1: Do I qualify?
To apply for an SBA loan, you and your business must meet the following requirements:

  • Corporation or LLC with at least 10 employees
  • In business for at least 2 years
  • Annual gross sales of at least $360,000
  • US citizenship or legal permanent residency
  • No bankruptcies or foreclosures within the past 3 years
  • No defaults on government-backed loans
  • No outstanding tax liens
  • No outstanding collection accounts

Approved businesses generally met the following criteria:

Annual Revenue


Credit Score


Time in Business

6 months+

Step 2: Gather your documents.

  • Driver’s license
  • Business license or certificate
  • Voided business check (for business bank account information)
  • Bank statements
  • Credit report/statement of personal credit history
  • Business tax returns
  • Credit card processing statements
  • Personal tax returns – 3 years
  • Business tax returns – 3 years
  • Business plan (in select industries)
  • Personal financial statement
  • List of real estate owned
  • Debt schedule/loan/rent/lease documentation
  • Deeds/title/ownership documentation for any collateral/security
  • Current profit & loss statements and balance sheet
  • A/R and A/P reports

Step 3: Fill Out Application.
Being with filling out an application (please contact us directly so we can supply you with the correct SBA application).

Step 4: Connect and discuss.
Upon receipt of your completed application, a skilled representative will review your submitted information, draft all potential opportunities, and reach out to you to explain the repayment structure, rates, and terms of your available options. This eliminates any questions or concerns about any surprises or hidden fees during repayment.

Step 5: Receive Approval.
SBA loans through our network generally take 3-5 weeks to process. Once approved and your file is deemed closed, the funds will appear in your bank account in a few business days.

What if I am declined for a SBA loan?

  • Due to strict requirements for approval, applications can get declined for several reasons. When applying, it is important to only apply if you are 100% certain about your institution’s requirements and your ability to meet the requirements. Contacting the institution directly to obtain this information is the best course of action.
  • A declination of your application is not the end of the road. You can qualify for other advantageous options. Additional products may not have the lowest rates or the highest borrowing amounts on the market as an SBA loan but in most cases, business growth can take longer than expected. A great option to start with may be a Business Term Loan or Business Line of Credit. Creating a consistent record of timely payments can boost your credit score and prove your ability to make regular payments without damaging cash flow.
  • If you still have trouble qualifying for other options, we will recommend alternative business financing tools. They are significantly easier to qualify for than business loans and can be accessed through Direct Biz Funding.
  • Less than perfect credit can hinder business owners from obtaining financing. We can help boost your credit score by eliminating the issues keeping your score down with our credit repair services.

Ready to apply for a SBA Loan?

How long does a SBA loan approval take?

  • At Direct Biz Funding, our network can obtain approvals in as little as 3-5 weeks. On the other hand, banks can take at least three months to determine approval.
  • The lengthy approval process is yet another sacrifice you have to make in exchange for the various advantages of SBA Loans.

Is it difficult to get approved for a SBA loan?

Each institution has its own criteria for approval, so depending on the institution, there may be varying requirements. As SBA loans are the most advantageous business loan, it is to no surprise that they can carry strict conditions. Other products require excellent credit and high annual revenue, but the SBA loan is exclusively reserved for established businesses. Keep in mind that the intended purpose of the funds can significantly impact your application process and approval odds.

How much collateral is needed for a SBA loan?

For SBA (7) A loans greater than $350,000, collateral may need to match the value of the borrowing amount. Each institution will have different collateral requirements and policies since some institutions do not accept certain forms of collateral.

What are the costs associated with a SBA loan?

  • SBA loans have some of the lowest costs available. Like any other business loan, costs will vary depending on credit score, loan length, etc. Direct Biz Funding clients often solidify better rates on business loans than they would from other lenders due to our world class experience and decades in the business. Our lender network’s SBA loans start at just 5% whereas most lenders start their SBA loans over 7%.
  • While SBA program loans are known for their low-interest rates, they also come with a “guarantee fee.” This is the fee that the SBA charges the lender to guarantee the loan. The lender passes that fee on to the borrower and could charge an additional administration fee.

Are you wondering where to get the best SBA rates?

Below, you will find a snapshot of what you could pay for SBA-backed credit. Keep in mind that your credit score and the term or length of your loan impacts the interest rate you get offered.

7(a) Program Loan Fees and Rates:

  • Interest rate of Prime Rate + 4.25% for loans less than $25K (for loans with terms less than 7 years – term loans greater than 7 years come with a rate of Prime + 4.75%), Prime Rate + 3.25% for loans between $25,001 and $50,000, and Prime + 2.75% for loans $50,001 and up.
  • Guarantee fee of 1.7% for loans up to $150K, 2.25% for loans over $150K.
  • A guaranteed fee could be rolled into your loan.

Microloan Program Fees and Rates:
These community-administered loans don’t come with guaranteed fees. Interest rates vary, yet in 2019 the average rate for an SBA Microloan was 7.5%. However, keep in mind the short repayment terms of under six years.

CDC/504 Fees and Rates:

  • Fees of approximately 3% of the loan – could be rolled into your loan.
  • Interest Rates – the rates for CDC/504 loans depend on several factors and require complex calculations. Talk to your lender to get an idea of your rate.

SBA Disaster Loan Fees and Rates:
According to the most current fact sheet, SBA disaster loans for businesses come with low rates of 3.58% and repayment terms of up to 30 years.

Ready to apply for a SBA Loan?