How to Get a Business Loan (SBA and Bank Options)
SBA-backed loans are the workhorse for established small businesses: the government guarantees most of an SBA 7(a) loan (up to $5 million), which makes banks lend to businesses they would otherwise refuse. Startups and businesses under 2 years old lean on SBA microloans, credit unions, and online lenders instead.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official US sources(2025-Latest).
0 of 7 steps
- Before You Go 1–2 hours
Define the amount and the exact purpose
Lenders reject vague requests. "Working capital to cover inventory purchases through Q4" or "$80,000 of kitchen equipment" gets underwritten; "growth money" does not. Your amount should map to a specific plan and a specific repayment source — the revenue the loan generates or your proven cash flow.
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- Before You Go 30 min
Check whether you clear the standard bar
Typical bank/SBA requirements: 640+ personal credit (SBA microloans go lower), 2+ years in business, roughly $100k+ annual revenue, and no recent bankruptcies. Stronger on one axis can offset weakness on another — excellent cash flow can carry a 620 score, but startups under 2 years should target microloans, credit unions, or the SBA Small Loan exception rather than a standard 7(a).
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- Before You Go 1 hour
Match the loan type to the need
SBA 7(a): the general-purpose loan up to $5M — working capital, equipment, real estate, refinancing; 10-year terms (25 for real estate), ~10% down, personal guarantee required. SBA microloan: up to $50,000 through nonprofit intermediaries, best for startups. Term loan: fixed lump sum from a bank. Line of credit: revolving, for cash-flow gaps. Equipment financing: the equipment itself is the collateral, so approval is easier.
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- Go 1–2 hours
Find lenders through SBA Lender Match and locally
Use SBA.gov's Lender Match tool to find SBA-approved lenders active in your state and industry — approval cultures differ sharply between banks. Add your existing bank (relationship helps) and a local credit union (most flexible for small balances). Compare rates, guarantee fees, and required collateral across at least three.
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- Fill / Prepare 3–5 days
Assemble the full package
Business plan with use of funds, personal and business tax returns (2–3 years), P&L and balance sheet, 12-month projections, bank statements, and the personal financial statement. For loans over $350,000 the SBA additionally requires a personal guarantee from every 20%+ owner; collateral is required where available. Complete packages move; incomplete ones stall for months.
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- Submit & Pay 2–12 weeks
Apply, then respond to underwriting fast
Expect 2–4 weeks for a decision on bank loans and 1–3 months for full SBA 7(a) processing (SBA Express is faster, capped lower). Underwriters will ask follow-up questions — the businesses that answer same-day close weeks earlier. On approval, review the full fee schedule and the personal guarantee scope before signing.
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- Follow Up ongoing
Repay cleanly to build a banking track record
On-time repayment on your first business loan is how the second one gets faster and cheaper — banks reward a proven payment history with higher limits and lighter documentation. Keep business finances in a dedicated account so the record is clean for next time.
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FAQ
Frequently Asked Questions
Can a startup get a business loan?
Rarely from banks — most want 2 years of tax returns. Realistic startup routes: SBA microloans (up to $50,000 via nonprofit lenders), equipment financing (the equipment is the collateral), business credit cards, revenue-based financing, or the SBA Community Advantage pilot lenders. The other honest answer for pre-revenue startups is personal savings, friends & family, or an SBA loan backed by a very strong personal guarantee and outside income.
What exactly is an SBA loan?
The Small Business Administration does not lend money (except disaster loans). It guarantees a large portion of a bank-made loan — roughly 50–85% on a 7(a) — so the bank takes less risk and approves businesses it would otherwise decline. You repay the bank; the guarantee means the bank gets repaid by the SBA if you default — and the SBA then comes after your personal guarantee.
Do I need collateral and a personal guarantee?
For SBA 7(a) loans over $350,000: personal guarantee from every owner with 20%+ equity — no exceptions. Collateral is required to the extent available (equipment, real estate, receivables), though the SBA will not decline a loan solely for weak collateral if other factors are strong. Online lenders may skip collateral but price that risk into much higher rates.
What about PPP loans?
The Paycheck Protection Program stopped accepting new applications in 2024 and its forgiveness window has closed — it is a closed program, not a current option. Businesses that still hold EIDL loans manage them through the SBA's loan servicing portal; they are no longer being issued either.
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