What is an SBA 7(a) loan?

The SBA 7(a) loan is the Small Business Administration's flagship lending program, offering loans up to $5 million for a wide range of business purposes including real estate, equipment, working capital, and business acquisition. The SBA guarantees 75%–85% of the loan, reducing risk for lenders and allowing borrowers who may not qualify for conventional loans to get funded. Terms can extend up to 25 years for real estate and 10 years for equipment/working capital. Down payments are typically 10%–30%. Interest rates are tied to the prime rate plus a spread and are capped by SBA guidelines. Processing takes 30–90 days.