# SBA 7(a) loan

> SBA 7(a) is the most common small business loan — federally-guaranteed term loans up to $5M from approved SBA lenders. APR prime + 2.75-4.75% (8-12% in 2026). 25-year max term for real estate, 10-year for working capital. Takes 30-90 days but cheapest non-personal-credit option.

SBA 7(a) is the flagship small business loan program from the U.S. Small Business Administration. Loans up to $5M for working capital, equipment, real estate, and acquisitions. The SBA guarantees 75-90% of the loan, which lets banks offer better terms than they would otherwise.

**The 2026 terms.**
- **Loan amount**: up to $5M (up to $5.5M with combined 7(a) + 504).
- **Interest rate**: variable rate, prime + 2.75% to 4.75% based on loan size and term. With 2026 prime ~7.5%, APR ranges 10.25-12.25%.
- **Term**: 10 years for working capital, 10 years for equipment, 25 years for commercial real estate.
- **SBA guarantee fee**: 0.25-3.75% based on loan size and term (rolled into loan).
- **Down payment**: 10% typical (varies by use of proceeds).

**Qualification requirements.**
- 24+ months operating history.
- 680+ personal credit (some lenders flexibly down to 650).
- Strong DSCR (1.15+).
- US-based business, owner-occupied if CRE.
- Owners with 20%+ stake must personally guarantee.
- Use of proceeds must match SBA-approved categories.

**The 30-90 day timeline (and why).**
- **Days 1-10**: pre-qualification + document gathering (3 years business + personal tax returns, financial projections, P&L, balance sheet).
- **Days 10-30**: lender underwriting + SBA submission.
- **Days 30-60**: SBA approval (or kickback for additional docs).
- **Days 60-90**: closing + funding.

**Top SBA 7(a) lenders (2026).**
- **Live Oak Bank** — #1 SBA lender by dollar volume for 7+ years. Industry-specialty teams.
- **JPMorgan Chase** — top-5 SBA originator.
- **Wells Fargo** — top-3 historically.
- **Newtek Small Business Finance** — top-3 non-bank SBA lender.
- **SmartBiz Loans** — fintech UX layered on SBA partner banks.

**SBA 7(a) vs MCA — the cost comparison.**
- $500K capital need.
- SBA 7(a) at 10% APR over 10 years: monthly payment ~$6,600. Total interest paid: $292K.
- Same $500K via MCA at factor 1.30 over 12 months: monthly payment ~$54K. Total cost: $150K.
- MCA looks cheaper short-term but: SBA spreads cost over 10 years (manageable) while MCA crushes cash flow over 12 months.
- For genuine 10-year capital needs, SBA is always cheaper.

**The strategic insight.** SBA 7(a) is the cheapest non-personal-credit financing available to small businesses. The 30-90 day wait is the price you pay. If you qualify, almost always worth it vs MCA for capital needs longer than 18 months.

## Related terms

- [MCA vs loan (legal distinction)](https://fundnode.co/llms/glossary/mca-vs-loan) — An MCA is legally a purchase of future receivables, not a loan. This distinction exempts MCAs from state usury caps but requires specific contract structure — including reconciliation provisions.
- [Merchant cash advance (MCA)](https://fundnode.co/llms/glossary/merchant-cash-advance) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.

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Source: https://fundnode.co/glossary/sba-loan-7a (HTML version)
Document: SBA 7(a) loan — Fundnode MCA Glossary
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