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SBA loan

Understanding SBA Loan Programs

Let’s not mince words: pursuing an SBA loan can be intimidating. On top of all of the usual concerns associated with traditional business loans, SBA loan programs each come with additional restrictions and requirements. Even learning about the different options can feel like information overload, making it difficult to effectively choose the program that fits your needs.

Visa Business Plans is here to make that choice easier. We’re providing a straightforward breakdown of the most common SBA loan programs currently available so that you can make an informed decision on the financing path that may be right for your business.

Because of the complexity of this topic, we recommend that readers unfamiliar with SBA loans check out our blogs on Everything You Need To Know About SBA Loans and Introduction to SBA Loans.

7(a) loans

The 7(a) loan is the SBA’s flagship program and the most popular option for borrowers because of its versatility, low-interest rates, and longer repayment periods.

  • The maximum borrowing amount is $5 million, and there’s no minimum borrowing amount.

  • The SBA guarantees 85% of your loan if it’s less than $150,000 and 75% if it’s more than $150,000. However, it limits guarantees to $3.75 million.

  • This program has a wide spectrum of eligible business purposes, such as working capital, refinancing debt, expansion, new construction, startup expense, purchasing real estate, and more. However, the stated purpose will affect the length of repayment periods:

    • Real estate – 25 years

    • Equipment – 10 years

    • Working capital or inventory loans – 10 years

  • Interest rates are based on a federal prime rate of 7.75% as of Feb. 15, 2023.

    • 7(a) Loans Repaid In Less Than 7 Years

      • $25,000 or less – Prime + 4.25%

      • $25,001 - $50,000 – Prime + 3.25%

      • More than $50,000 – Prime + 2.25%

    • 7(a) Loans Repaid In More Than 7 Years

      • $25,000 or less – Prime + 4.75%

      • $25,001 - $50,000 – Prime + 3.75%

      • More than $50,000 – Prime + 2.75%

There are two more SBA loan programs that are very similar in structure to the standard 7(a) loan. However, these loans offer slightly different advantages and restrictions.

  • 7(a) Small Loans

    • The maximum loan amount is $350,000.

    • The SBA guarantee, interest rates, approved purposes, and repayment terms are the same as the standard 7(a)

    • All applications will be credit scored by the SBA. Those without an acceptable credit score will be directed to apply for a standard 7(a) or an SBA Express Loan.

  • SBA Express Loan

    • The maximum loan amount is $350,000.

    • Only 50% of the loan is backed by the SBA.

    • Interest rates are higher, as the lender may charge up to 6.5% in addition to the prime rate.

    • Approved purposes are the same as the standard 7(a)

    • Repayment terms may not exceed 7 years if the loan is used as a line of credit.

    • One important benefit of the SBA Express loan is that the process is simpler and that makes approvals much faster. For the standard 7(a) loan, applicants can expect to wait 5 - 10 business days just for an initial response. The SBA Express loan shortens the wait for a response to just 36 hours.

504/CDC Loans

This is another popular SBA loan program as it can provide up to $5.5 million to purchase fixed assets, such as machinery, buildings, or land, or the construction of commercial real estate.

  • The maximum loan amount is $5.5. Million

  • The approved 504 loan project or purpose is funded up to 50% from a private lender and up to 40% from a Certified Development Company (CDC). The applicant will typically provide a downpayment of 10%, though it may be as high as 15% for startups and special-use properties (such as gas stations).

  • The SBA guarantees the CDC portion of the loan.

  • Repayment periods range from 10 to 25 years, depending on the intended use of the loan.

    • Machinery or equipment – usually 10 years but cannot be less than 7 years

    • Real estate – usually 20 or 25 years but cannot be less than 10 years

  • The SBA estimates that applicants can anticipate interest rates of 3% of the total debt. Interest rates for the third-party portion of the loan have a maximum rate of 6% above the prime rate.


The Microloan program is intended for use by entrepreneurs from traditionally underrepresented groups, such as women and minorities, particularly when other financing options do not apply.

  • Borrowers can apply for as much as $50,000. The average SBA microloan is around $13,000.

  • Microloans can cover purposes such as working capital, supplies, machinery, and equipment. It cannot be used for real estate.

  • Borrowers are required to repay the loan within seven years.

  • Interest rates are negotiable with the SBA-approved lender and generally range between 7% and 9%.


CAPLines is a series of programs that helps small businesses meet their short-term and cyclical working-capital needs. The type of financing provides revolving credit for covering seasonal and/or short-term expenses

  • There are four programs:

    • Seasonal CAPLine: financing for seasonal increases of accounts receivable, inventory, or associated increased labor costs. It can be revolving or non-revolving.

    • Contract CAPLine: financing for direct labor and material cost associated with performing assignable contracts. It can be revolving or non-revolving.

    • Builders CAPLine: financing for direct labor and material costs for a small general contractor or builder constructing or renovating commercial or residential buildings. The building project serves as the collateral, and loans can be revolving or non-revolving.

    • Working CAPline: This is an asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit. Businesses continually draw from this line of credit, based on existing assets, and repay as their cash cycle dictates. These loans require continual servicing and monitoring of collateral, so additional fees may be charged by the lender.

  • The maximum loan amount is $5 million.

  • The percentage of SBA guarantee is the same as the 7(a) loan program.

  • Repayment terms may not exceed 10 years, except for the Builders CAPLine, which may not exceed 5 years.

  • The interest rates are the same as the 7(a) loan program.

  • CAPLines are typically offered alongside traditional SBA loans, such as the 7(a).

Export Loans

There are three different types of SBA loans that fall into this category, but they share a common purpose. SBA export loans are designed for companies that need help expanding international trade, exporting goods, and competing in the global market. The three types of SBA Export loans are:

  • International Trade loans

    • The maximum loan amount is $5 million.

    • The SBA guarantees 90% of the loan, up to $4.5 million, or $4 million if the loan will be used as working capital.

    • The loan may be used for equipment, facilities, land, debt refinancing, and permanent working capital.

    • Repayment terms may not exceed 25 years.

    • The interest rates are the same as the 7(a) loan program.

    • This loan is intended for businesses that participate, or are preparing to participate, in international trade. It can also be used by businesses that are adversely affected by competition from international imports.

  • Export Working Capital loans

    • The maximum loan amount is $5 million.

    • The SBA guarantees 90% of the loan, up to $4.5 million.

    • The loan is intended for short-term working capital.

    • Repayment terms are typically less than one year, and may not exceed three years

    • There is no interest rate cap for these loans, though the SBA does monitor them for reasonableness.

    • This loan is intended for those that need additional working capital to increase exports without disrupting their domestic operations.

  • Export Express loans

    • The maximum loan amount is $500,000.

    • The SBA guarantees 90% for loans of $350,000 or less. For loans greater than $350,000, the SBA guarantees 75%.

    • The loan may be used for equipment, facilities, land, debt refinancing, and permanent working capital.

    • Repayment terms are the same as the SBA Express loan.

    • The interest rates are the same as the SBA Express loan.

    • This loan is intended for those that need a fast turnaround. This loan program offers streamlined processing, making approvals faster.

This topic truly is dense, and we couldn’t cover everything. Each of these loan programs could be covered in its own article. In the future, we just might!

We highly recommend that those interested in pursuing an SBA loan visit their local SBA office or an SBA-preferred lender to learn more fine details. But we hope that readers find this article useful as a quick reference for understanding and comparing the different programs.

In order to secure an SBA loan, an applicant must provide a personal statement attesting to their character and managerial expertise, as well as a feasible business plan. This important step could be the difference between an approval and a denial. Visa Business Plans is here to help! We have more than 13 years of experience drafting solid, customized business plans that can help you attain the SBA loan your business needs to thrive. Contact us today for your free consultation!

Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in four different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.

Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.

At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.