If you’re wondering how to get an SBA loan for your small business in 2025, you’re not alone. SBA loans are among the most popular forms of small business financing in the U.S. — and for good reason. They offer low interest rates, longer repayment terms, and greater flexibility than traditional bank loans.
In this updated guide, we’ll break down how SBA loans work, what types are available, what you’ll need to apply, and how to improve your chances of approval.
To understand how to get an SBA loan, it’s helpful to know how they work. The U.S. Small Business Administration (SBA) doesn’t lend money directly. Instead, it partners with approved lenders — like banks and credit unions — to guarantee a portion of SBA-backed loans made to small business owners.
This United States government-backed guarantee reduces the lender’s risk, making it easier for entrepreneurs to access funding.
The credibility and direct involvement of the owner play a crucial role in the loan application process, as lenders often look for an owner’s commitment and experience when evaluating applications.
✅ Quick Fact: You can use SBA-guaranteed loans for working capital, real estate, equipment, startups, and more.
This is the most common SBA loan and the best choice for general-purpose business funding.
📎 More on SBA 7(a) Loans →
Ideal for purchasing fixed assets such as property or large equipment.
📎 More on SBA 504 Loans →
Perfect for startups or very small businesses that need $50,000 or less.
📎 More on SBA Microloans →
If you want to know how to get an SBA loan, it starts with preparation. You’ll need to meet lender qualifications and complete both standard and SBA-specific paperwork.
📎 Download SBA Forms →
Not necessarily. While the SBA requires lenders to seek collateral when available, lack of collateral alone is not a deal-breaker.
🛡️ According to the SBA, they will generally not decline a loan when the only unfavorable factor is lack of adequate collateral.— SBA SOP 50 10
If your business is otherwise strong, lack of collateral will not disqualify you.
This free tool helps you connect with SBA-approved lenders in your area.🔗 Try SBA Lender Match →
Work with your accountant or advisor to compile tax returns, financial statements, a business plan, and required SBA forms.
Apply directly through an SBA lender or Certified Development Company (CDC). Your lender will guide you through the rest of the process.
Understanding the terms and conditions of your SBA-backed loan is crucial before you sign on the dotted line. The Small Business Administration (SBA) sets clear guidelines to protect small businesses and ensure fair access to financing. SBA-backed loans typically feature flexible repayment schedules, competitive interest rates, and lower collateral requirements compared to conventional loans, making them a popular choice for small businesses seeking affordable funding.
However, it’s important to carefully review your loan agreement. Some SBA loan programs may include prepayment penalties, which are fees charged if you pay off your loan early. However, 7(a) loans typically do not have prepayment penalties unless the loan term is 15+ years and is prepaid within the first 3 years. There may also be restrictions on how you can use your loan proceeds, so make sure your intended use aligns with SBA guidelines. Additionally, most SBA loans require an upfront fee, usually between 2% and 3.5% of the total loan amount, which helps cover the cost of the SBA guarantee. By understanding these loan terms and conditions, you can avoid surprises and ensure your business gets the most out of its financing.
SBA loan proceeds are designed to help your business grow and thrive, but there are specific rules about how these funds can be used. Eligible uses include working capital to cover day-to-day expenses, leasehold improvements to upgrade your business space, purchasing equipment or inventory, and even refinancing existing business debt under certain conditions. These options make SBA loans a versatile tool for many business needs.
However, the SBA places restrictions on loan proceeds to ensure funds are used responsibly. You cannot use an SBA loan for speculative investments, such as buying stocks or securities, nor can you use the funds to pay off personal debts or cover non-business expenses. Misusing loan proceeds can result in severe penalties, including the possibility of having your loan called due and forfeiting your funding. Always confirm that your planned use of funds is authorized under SBA guidelines to protect your business and maintain compliance.
Choosing the right lender is a key step in securing an SBA loan. The Small Business Administration (SBA) works with a network of approved lenders who are experienced in processing SBA-backed loans and understand the unique needs of small businesses. These lenders can guide you through the application process, help you understand the various SBA loan programs, and ensure your application meets all requirements.
When selecting a lender, consider factors such as interest rates, fees, and repayment terms, as well as the lender’s familiarity with your industry. A lender with experience financing businesses like yours can offer valuable insights and improve your chances of approval. Working with an SBA-approved lender not only streamlines the process but also gives you access to expert advice and support throughout your loan journey.
Applying for an SBA loan can be a detailed process, and avoiding common mistakes can save you time, money, and frustration. One of the most frequent errors is submitting incomplete or inaccurate documentation, which can delay your application or lead to a denial. Always double-check that your financial statements, tax returns, and business information are up to date and accurate.
Another pitfall is misrepresenting your business’s credit history or financials. Honesty is essential—any discrepancies can result in your loan being rejected or even legal consequences. Be wary of lenders who charge excessive fees or unusually high interest rates, as these can dramatically increase the overall cost of your loan. By staying organized, transparent, and cautious, you can navigate the SBA loan process smoothly and set your business up for success.
Before you submit your SBA loan application, use this final checklist to ensure you’re fully prepared:
If you’ve been wondering how to get an SBA loan, the process may seem complex, but it’s more accessible than ever. Whether you’re launching your business or scaling to the next level, an SBA loan could provide the flexible, affordable capital you need. Start today by visiting the official SBA loan page or contacting ZenBusiness for guidance on business setup and compliance.
At ZenBusiness, we empower entrepreneurs by handling the paperwork so you can focus on growing your business. If you’re preparing to apply for a loan, we can help with:
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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Bill Bauer
Bill Bauer is a writer and editor at ZenBusiness. With over 37 years of experience, he has served as editor-in-chief for two magazines and a weekly newspaper. Since 2018, Bill has been writing about small business topics for ZenBusiness, helping entrepreneurs better understand business formation, compliance, and growth.
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