How Do I Get a Small Business Loan? (SBA and Other Options)
Loan types compared, how SBA 7(a), 504 and microloans work (including the 2026 limit change), what lenders want and how to get approved.
Decide what you need the money for, then match it to a loan type: SBA 7(a) for general purposes, SBA 504 for real estate and equipment, microloans up to $50,000 for startups, or a line of credit for cash flow. Prepare a business plan, financial statements and tax returns, and strengthen your credit before applying.
In this article
Getting a small business loan comes down to three things: choosing the right type of financing for what you need, proving you can repay it, and approaching the right lenders. This guide explains the main options in the US, including SBA loans, what lenders look for, and how to improve your chances, especially if your business is new.
Types of small business loans
| Type | Best for | Notes |
|---|---|---|
| SBA 7(a) loan | Working capital, equipment, buying a business, refinancing | Up to $5 million; partly guaranteed by the SBA |
| SBA 504 loan | Real estate and major equipment | Long-term, fixed-rate financing |
| SBA microloan | Startups and small needs | Up to $50,000 through nonprofit lenders |
| Bank term loan | Established businesses with good credit | Usually the lowest rates, strictest approval |
| Business line of credit | Cash flow gaps, seasonal needs | Borrow and repay as needed |
| Equipment financing | Vehicles, machinery, technology | The equipment is the collateral |
| Invoice financing | Businesses waiting on unpaid invoices | Advance against your receivables |
| Online lenders | Fast funding, weaker credit | Faster approval, usually higher costs |
How SBA loans work
The Small Business Administration doesn't usually lend money directly. Instead, it guarantees part of loans made by approved banks and lenders, which lowers their risk and lets them offer better terms to small businesses.
- 7(a) loans are the SBA's main program, for amounts up to $5 million. They can fund working capital, equipment, real estate, refinancing and buying a business.
- 504 loans fund major fixed assets like buildings and large equipment, also up to $5 million in most cases.
- Microloans go up to $50,000 and are made through nonprofit community lenders, which often provide training as well. They're one of the most accessible options for new businesses.
2026 change: as of July 2026, the SBA raised the combined limit across its 7(a) and 504 programs from $5 million to $10 million, so one borrower can use up to $5 million from each program.
The SBA's free Lender Match tool on SBA.gov connects you with participating lenders based on what you need.
What lenders look for
- Credit: your personal credit score and, if you have one, your business credit profile. See how to build business credit.
- Cash flow: proof the business generates enough to repay. Lenders often look at your debt service coverage ratio: cash flow available divided by loan payments.
- Time in business: many banks prefer two years or more. Newer businesses should look at microloans, SBA lenders that work with startups, and community lenders.
- Collateral: assets that secure the loan, such as equipment, real estate or receivables.
- A personal guarantee: SBA loans generally require owners of 20% or more of the business to personally guarantee the loan.
- Your plan: a clear business plan showing how you'll use and repay the money.
Documents you'll usually need
- Business plan with financial projections. See how to write a business plan.
- Personal and business tax returns (often the last two to three years)
- Profit and loss statement and balance sheet
- Business bank statements
- Business licenses, registration and ownership documents
- A debt schedule listing existing loans
- Details of collateral
Lenders want clean books. Keep income and expenses organized month by month.
Organize your financesHow to improve your chances of approval
- Clean up your credit before you apply: pay down card balances and fix errors on your reports.
- Separate business and personal finances with a dedicated business account.
- Borrow for a specific purpose and show exactly how the money produces revenue.
- Ask for the right amount. Too little can be as worrying as too much.
- Start with your own bank or a local credit union, where you have a relationship.
- Get free help from SCORE or a Small Business Development Center to review your application.
How to apply for a business loan, step by step
- Define the need: exact amount, what it's for, and how it increases revenue or cuts costs.
- Check your credit, both personal and business, and fix errors first.
- Gather documents: business plan, financial statements, tax returns, bank statements, legal documents.
- Compare lenders: your bank, local credit unions, community development financial institutions (CDFIs), SBA lenders through Lender Match, and online lenders.
- Prequalify where possible to see likely terms without a hard credit check.
- Submit a complete application. Missing documents are the most common cause of delays.
- Compare offers on total cost: APR, fees, term, prepayment penalties, collateral and guarantees.
- Read the agreement carefully before signing, and ask an accountant or attorney about anything unclear.
Understanding the true cost of a loan
| Term | What it means |
|---|---|
| Interest rate | The yearly cost of borrowing, not including most fees |
| APR | Annual percentage rate: interest plus fees, expressed yearly. The best number for comparing loans |
| Origination fee | An upfront fee, often a percentage of the loan |
| Term | How long you have to repay. Longer terms lower payments but usually raise total interest |
| Collateral | Assets the lender can claim if you don't repay |
| Personal guarantee | Your promise to repay personally if the business can't |
| Factor rate | A multiplier used by some short-term lenders (e.g. 1.3), which can hide a very high APR |
Before you borrow, run the numbers: will the money generate enough extra profit to cover the payments with room to spare? If the loan only covers ongoing losses, fix the business model first.
Alternatives to a loan
Grants (mostly for specific industries, research, or local programs; beware "grant" scams that charge fees), crowdfunding, friends-and-family funding, angel investors, revenue-based financing, and simply growing from customer revenue are all worth considering. Each has trade-offs in cost, control and speed.
Watch out for predatory financing
Be cautious with merchant cash advances and short-term loans that quote a "factor rate" instead of an annual percentage rate (APR). Their real cost can be extremely high. Always ask for the APR and total repayment amount, and compare offers before you sign.
Frequently asked questions
Can I get a small business loan with no revenue?
It's difficult with banks, but possible through SBA microloans, community development lenders, some SBA lenders that work with startups, and personal financing. A strong plan, good personal credit and some of your own investment help.
What credit score do I need for a small business loan?
Requirements vary by lender. Banks and SBA lenders generally prefer good to excellent personal credit, while online lenders may accept lower scores at a higher cost.
How long does an SBA loan take?
It often takes several weeks to a few months from application to funding, depending on the lender, loan type and how complete your paperwork is. SBA Express loans are designed to be faster.
What is the maximum SBA loan amount?
SBA 7(a) and 504 loans go up to $5 million each. Since July 2026, a borrower can combine them up to $10 million. Microloans go up to $50,000.
This article is general information for US readers, not legal, tax or financial advice. Rules, prices and platform policies change, so confirm details with official sources or a qualified professional.