To get a business loan, you pick the amount and purpose, confirm your business meets the basic program rules, apply through a lender, and compare the full cost of each offer before you sign. Most federal options run through lenders: SBA 7(a) loans are made by participating lenders, 504 loans come through Certified Development Companies, and microloans come through nonprofit intermediaries. In the Federal Reserve Banks’ 2025 Small Business Credit Survey, published March 3, 2026, 60% of firms applied for financing in the prior 12 months, and 42% of applicants received the full amount they sought.
Step-by-step: how to get a business loan
- Name the amount and the use. Among firms that sought financing, the most common reasons were to meet operating expenses (56%) or pursue an expansion or new opportunity (46%). SBA says its 7(a) loans can fund working capital, equipment, real estate, refinancing of business debt, and changes of ownership.
- Check the basic rules. The SBA’s 7(a) loan page lists these requirements: be an operating business, operate for profit, be located in the U.S., be small under SBA size requirements, not be an ineligible business type, be creditworthy with a reasonable ability to repay, and not be able to get the credit on reasonable terms from non-federal, non-state, and non-local government sources.
- Pick the right channel. Use SBA’s Lender Match tool to find a participating lender for a 7(a) loan, a Certified Development Company for a 504 loan, or an SBA-approved intermediary for a microloan. Your local SBA District Office can also help in person, online or by telephone.
- Gather documents. Your lender tells you which documents it needs. The documents section below lists what SBA’s rules require.
- Compare the full offer. Look at the rate type, the fees, the repayment schedule and the total you will pay. The rate and fee sections below work as a checklist.
- Check the lender and the contract. Confirm who the lender is and read every guarantee and fee before you sign. The scams section below covers common warning signs.
SBA loan programs at a glance
As of October 28, 2026, SBA’s program pages list these limits:
| Program | Maximum amount | What it can fund | Where you apply |
|---|---|---|---|
| 7(a) loan | $5 million | Working capital, equipment, real estate, refinancing business debt, changes of ownership | A participating SBA lender |
| 504 loan | $5.5 million (the page’s summary line says up to $5 million) | Long-term fixed assets such as buildings, land, and machinery with a useful life of at least 10 years; not working capital or inventory | A Certified Development Company (CDC) |
| Microloan | Up to $50,000; SBA says the average is about $13,000 | Working capital, inventory, supplies, furniture, fixtures, machinery, equipment; not existing debts or real estate | An SBA-approved nonprofit intermediary |
7(a) loans
The 7(a) program is SBA’s primary business loan program. SBA provides a loan guarantee to lenders, and you apply to a local lender, not to SBA. Most 7(a) term loans are repaid with monthly payments of principal and interest from business cash flow. Fixed-rate payments stay the same, while variable-rate payments can change when the rate changes.
The 7(a) Working Capital Pilot (WCP) is a monitored line of credit inside the 7(a) program, with a maximum loan maturity of 60 months. SBA says it suits businesses with at least one year of operating history that can produce timely and accurate financial statements, accounts receivable and payable agings, and inventory reports. For the difference between the two structures, read working capital loans vs lines of credit.
504 loans
The SBA’s 504 loan page describes long-term, fixed-rate financing for major fixed assets. Repayment terms are 10, 20 or 25 years, and the rate is pegged to an increment above the current market rate for 10-year U.S. Treasury issues. The page says fees total approximately 3% of the debt and that the fee may be financed with the loan. If equipment is your use, compare sba 504 equipment financing with the 7(a) option.
Microloans
Microloans go up to $50,000 and are provided through SBA funding intermediaries, which are nonprofit community-based organizations. SBA says interest rates vary by intermediary and generally run between 8% and 13%. The maximum repayment term is seven years, and proceeds cannot be used to pay existing debts or buy real estate.
Grants
SBA says it does not provide grants for starting and expanding a business. Its grants go to nonprofits, Resource Partners and educational organizations for counseling and training, and SBA also lists the SBIR and STTR research programs for businesses doing scientific research and development. If you are offered an SBA grant, check the sender: SBA says it only communicates from email addresses ending in @sba.gov.
What it costs: interest rates and fees
Interest rates
Variable 7(a) rates can use a base rate plus a spread capped by loan size. The Federal Reserve’s H.15 Selected Interest Rates release dated October 27, 2026 lists the bank prime loan rate at 7.00%. The Federal Open Market Committee’s statement of October 28, 2026 kept the federal funds target range at 3-3/4 to 4 percent. NFIB’s September 2026 survey said small business borrowers reported higher rates on their recently received loans.
SBA’s procedural notice on 7(a) rates and fees on 7(a) alternative base-rate options sets these maximum spreads over the base rate:
| Loan amount | Maximum spread over the base rate |
|---|---|
| $50,000 and less | Base rate + 6.5% |
| $50,001 to $250,000 | Base rate + 6.0% |
| $250,001 to $350,000 | Base rate + 4.5% |
| $350,001 and higher | Base rate + 3.0% |
Upfront and annual fees
The SBA fee notice covers 7(a) loans approved from October 1, 2025 through September 30, 2026. Upfront fees are a percentage of the guaranteed portion of the loan:
| Loan size or term | Upfront fee (fee year ending September 30, 2026) |
|---|---|
| $150,000 or less | 2% of the guaranteed portion; the lender may keep no more than 25% of this fee |
| $150,001 to $700,000 | 3% of the guaranteed portion |
| $700,001 to $5,000,000 | 3.5% up to and including $1,000,000, plus 3.75% of the amount over $1,000,000 |
| Maturity of 12 months or less | 0.25% of the guaranteed portion |
The same notice sets a lender’s annual service fee of 0.55% of the outstanding balance of the guaranteed portion for that fiscal year, and says lenders may not pass that fee on to you. Ask your lender for the fee schedule that applies to a loan approved now, and check which fees appear on your offer.
How lenders decide, based on the 2025 survey
The Federal Reserve Banks’ survey was fielded from September 3 to November 14, 2025 and drew 6,525 responses from small employer firms with 1 to 499 employees. The Reserve Banks say it is a nationwide convenience sample, not a random sample, so its results should be read with the biases that come with that kind of sample in mind.
What happened to applicants
| Outcome for applicants | Share of applicants |
|---|---|
| Received the full amount sought | 42% |
| Received some or most of the amount sought | 36% |
| Received none | 22% |
The report covers loans, lines of credit and merchant cash advances together in these figures. Among applicants, those who sought financing at small banks were more likely to be fully approved (57%) than those who sought financing from other lenders.
Results by lender type
| Lender type | What the report says (2025 survey) |
|---|---|
| Large banks | Most often sought by applicants. 32% of borrowers said borrowing costs were higher than expected. |
| Online lenders | Second most often sought. Share of applicants seeking them rose from 17% in the 2020 survey to 29% in the 2025 survey. 60% of borrowers said actual costs were higher than expected, and 4% said lower. The most common challenges were high interest rates and unfavorable repayment terms. |
| Small banks | Third most often sought. 57% of applicants were fully approved. 37% of borrowers said borrowing costs were higher than expected. |
Credit union and bank applicants were more satisfied with their experiences than online lender and finance company applicants. Most applicants who were approved accepted the financing offered. Credit cards and loans were the most common financing products firms used on a regular basis.
Credit, personal guarantees and collateral
Of firms with debt, 59% used a personal guarantee to secure that debt, and 51% used business assets. SBA requires 7(a) borrowers to be creditworthy and able to repay. Starting March 1, 2026, SBA stopped screening 7(a) small loan applications with the FICO SBSS Score, and its procedural notice on that change says SBA updated its 7(a) small loan underwriting procedures to emphasize generally accepted industry credit analysis. Read any personal guarantee before signing it.
Bad credit, no credit, no money, or a new business
SBA’s 7(a) and 504 eligibility rules both require an operating business, so a business that has not started operating does not meet those two rules as written. The microloan page says microloans help small businesses start up and expand, for amounts up to $50,000. For SBA microloans, SBA-approved intermediaries make the credit decisions and set the terms.
LLC, EIN and buying a business
The SBA’s 7(a) loan page does not show a requirement for a particular business structure, such as an LLC. The same page does not show an EIN requirement, so ask your lender which business registration and tax ID it needs. For buying a business, SBA lists changes of ownership, complete or partial, among 7(a) uses.
Documents lenders ask for
SBA says the contents of a loan application vary with the size of the loan and the lender’s processing method, and that your lender will help you determine which documents you need. The SBA’s rules and procedures add these requirements:
- SBA says businesses considering a 7(a) WCP line can produce timely and accurate financial statements, accounts receivable and payable agings, and inventory reports.
- For 504 loans, a feasible business plan, qualified management expertise, good character, and the ability to repay.
- For 7(a) small loans, the lender’s credit memo must state why credit is not available elsewhere. SBA defines debt service as the future required principal and interest payments on all business debt, inclusive of new SBA loan proceeds.
- Ownership checks: SBA lenders must certify that no direct or indirect owner is an ‘Ineligible Person,’ and the rule looks back six months from loan issuance. The SBA procedural notice on SOP 50 10 8 revisions sets out this certification.
- For a non-citizen U.S. National owner, the lender must review evidence of that status, such as a birth certificate or passport.
SBA’s information notice on SOP 50 10 8.1 says the new procedures take effect October 1, 2026 for applications that receive an SBA loan number on or after that date. Ask your lender which version applies to your file.
Merchant cash advances: how they work and what to check
Merchant cash advances generally provide funds in exchange for a share of a business’s future revenue; review the contract and applicable law carefully. The FTC describes merchant cash advance companies as providing funds in exchange for a percentage of the business’s revenue, and says they typically make daily withdrawals from the business’s bank account until the obligation is met, as described in its January 2022 press release. A May 2025 Texas bill analysis of H.B. 700, engrossed version dated May 22, 2025 stated that commercial sales-based financing transactions were then not disclosed as loans in the context it discussed.
If a merchant cash advance is on the table, compare it with revenue-based financing vs traditional business loans before you sign anything.
Scams and red flags to check
- Personal guarantees and upfront fees. In its January 2022 release, the FTC alleged that RAM Capital Funding required personal guarantees and upfront fees after representing it would not, provided less funding than promised, and debited more than it said. The company and its owner were banned from the merchant cash advance and debt collection industries and ordered to pay $675,000.
- Promised access to credit. In November 2025, the FTC said Seek Capital and its CEO were permanently banned from providing business financing to settle allegations. The FTC alleged the company advertised special relationships with lenders for 0% interest, then charged clients thousands of dollars to open credit cards, often without the promised terms.
- Loans disguised as advances. The New York Attorney General’s Yellowstone settlement page, last updated April 16, 2026, says the Yellowstone companies provided illegal high-interest loans disguised as merchant cash advances. Under the settlement, $534 million in merchant debts was canceled, and the claim period closed January 9, 2026. The AG’s page says you can check your bank statement to see the name of the company debiting your account.
- Grant emails. SBA says it does not provide grants for starting and expanding a business, and that it only communicates from @sba.gov addresses.
For a step-by-step way to check an offer or a contract, see small-business contract scams.
Business loan vs other options
| Option | How the sources describe it |
|---|---|
| SBA 7(a) term loan | Up to $5 million; monthly principal and interest payments; made by a participating lender with an SBA guarantee |
| SBA 7(a) Working Capital Pilot | Monitored line of credit up to $5 million; maximum maturity of 60 months |
| SBA 504 loan | Long-term, fixed-rate financing for major fixed assets; not for working capital or inventory |
| Microloan | Up to $50,000 through a nonprofit intermediary; maximum term of seven years |
| Merchant cash advance | Generally provides funds in exchange for a share of future revenue; legal treatment may depend on the contract and applicable law. |
| SBA grant | Not available for starting or expanding a business |
Before you compare offers, ask the lender to show the total cost and what secures the loan.
In the survey, applicants most often sought financing at large banks.
State questions: Illinois, Florida, Texas, Michigan, Ohio and Oklahoma
The SBA program rules on this page are federal. For a question about your state, start with your local SBA District Office, which SBA says can help in person, online or by telephone, or with a Resource Partner. State treatment can be relevant; check the applicable state regulator and current law before relying on an MCA disclosure or contract rule. The New York Attorney General has taken action on merchant cash advances, and the Texas H.B. 700 analysis describes disclosure and broker registration requirements that would apply in Texas if the bill passes.
Frequently asked questions
Can I get a business loan with bad credit?
SBA’s 7(a) rules require the business to be creditworthy and able to repay. Since March 1, 2026, SBA has not provided or used the SBSS Score to screen 7(a) Small loan applications, and its updated underwriting procedures emphasize generally accepted industry credit-analysis processes. Microloans are another option for smaller amounts, and each lender decides.
Can I get a business loan with no money or no credit?
Start with the same steps. The 7(a) and 504 programs require an operating business, and the microloan page says microloans help businesses start up and expand, up to $50,000.
Does a grant replace a business loan?
No. SBA says it does not provide grants for starting and expanding a business.
Is a merchant cash advance a loan?
Not necessarily. MCAs generally involve funding in exchange for future revenue, but the legal treatment can depend on the agreement and applicable law.
What is a business loan interest rate?
It depends on the product, the lender and the base rate. As of October 27, 2026, the Federal Reserve’s H.15 release lists the bank prime loan rate at 7.00%, and SBA 7(a) spreads over the base rate are capped by loan size.
Before you apply
- Write down the amount, the use and how you will repay it.
- Ask each lender for the total cost in dollars and whether the rate is fixed or variable.
- Ask which documents and business ID the lender needs.
- Ask what personal guarantee or collateral it requires.
- Ask any lender that declines you for the specific reason.
- Check the company name on any merchant cash advance debit against the company on your contract.
By USPatriotNews.com Editorial Team
