Find the best business loan rates (2021)

Government-Guaranteed Financing SBA Loans

By Erin Ryan Reviewed By Elise Moores

According to the Federal Reserve Banks’ 2022 Small Business Credit Survey, SBA loans or lines of credit were the No. 1 form of financing sought by applicants surveyed. Specifically, 44% of small business firms applied. 

If you’re in search of capital to grow your business, aren’t in a rush for funds and want competitive rates and terms, an SBA loan is a great option.

At Fast Capital 360, we partner with reputable lenders throughout the country. Through this trusted network, we can deliver financing offers from the most popular SBA programs, the 7(a) and Express loans.

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What Is an SBA Loan?

SBA loans come in the form of short-term working capital and long-term financing programs. These loans are issued exclusively to qualifying small business owners by SBA-approved lenders. Most SBA loans are guaranteed by the government and have capped interest rates and fees.

How Do SBA Loans Work?

SBA loans work by lowering the risks lenders face when extending credit to small business owners. Should a borrower default on a loan, the Small Business Administration reimburses the lender a percentage of the borrowed funds, which varies depending on the loan type.

As a result, participating creditors consider a larger pool of applicants and offer competitive terms. All this translates into greater access to lower interest rates, longer repayment periods and affordable SBA loan payments.

What’s the Difference Between an SBA 7(a) and an Express Loan?

Standard 7(a) Loans

You can borrow up to $5 million through the standard SBA 7(a) loan program. These loans typically reach maturity in 7 years or 25 years depending on how the money is used.

The SBA guarantees 75% for loans greater than $150,000 or 85% for loans up to $150,000. SBA loan interest rates, though negotiable, are most often variable and based on the current Prime rate, currently at 4%, plus an additional lender rate. Currently, the maximum variable interest rate SBA lenders can charge on 7(a) loans is between 6.25% and 8.75%, depending on the loan amount and term.

The amount of time it takes to finalize a standard SBA loan (from application to funding) varies by lender but is usually between 60 to 90 days.

SBA Express Loans

If you’re looking for quick SBA loan financing, you might be disappointed to find that the SBA funding process is lengthy. However, SBA Express financing short-cuts this process and is the best choice for a fast SBA loan. 

When you submit an SBA Express loan application, you’ll receive a decision from your lender within 36 hours. Funds can be deposited within your business bank account in as little as 7 days of approval. 

The trade-off for this speed is less borrowing potential and higher interest rates. Through the SBA Express program you can acquire up to $500,000 over a 5- to 10-year term. The SBA will back up to 50% of this amount. The maximum interest rates lenders can charge on SBA Express loans is 8.50% for loans greater than $50,000 or 10.50% for loans of $50,000 or less.

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When Does an SBA Loan Make Sense?

You might be wondering why you should think about an SBA loan when there are so many financing options available. Here are a few reasons.

You Don’t Qualify for a Bank Loan

If you’ve been turned down for a conventional bank loan, an SBA loan may be an alternative to pursue. Thanks to the SBA guarantee, which reduces a lender’s risk, more borrowers may qualify for this type of funding.

You Want Competitive Rates and Terms

Arguably the next best option to a conventional loan in terms of interest rates and terms is an SBA loan. Because interest rates for SBA loans are capped, lenders can’t exceed a certain threshold. Additionally, if you want to stretch out your payments, long-term loan options are available, up to 25 years in some cases.

You’re Not In a Rush for Funds

Although an SBA Express loan is an expedited version of other SBA loans, these loans take time to be approved, processed and funded. If you have time on your side, an SBA loan could be a great fit.

Graphic illustrating the reasons to apply for an SBA loan

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What Does an SBA Loan Cost?

Your SBA business loan payment will depend on the program, the amount borrowed and the term.

Most often, SBA lending partners charge a variable interest rate as follows:

SBA Loan Type Loan Amount Interest Rate

(Prime = 4%)

SBA Express Up to $50,000 Prime + 6.5%
SBA Express $50,000-$500,000 Prime + 4.5%
SBA 7(a) < 7 years $25,000 or less  Prime + 4.25%
SBA 7(a) < 7 years $25,001-$50,000 Prime + 3.25%
SBA 7(a) < 7 years $50,000 and up Prime + 2.25%
SBA 7(a) 7 years $25,000 or less Prime + 4.75%
SBA 7(a) 7 years $25,001-$50,000 Prime + 3.75%
SBA 7(a) 7 years $50,000 and up Prime + 2.75%

Be aware that some SBA lending partners charge an origination fee or loan packaging fee.

Additionally, the SBA charges a guarantee fee, which is passed on to the borrower. Upfront guarantee fees for 7(a) loans, which include Express loans, are outlined below.

Loan Amount Guarantee Fee (Loans With Maturity Exceeding 12 Months)
$350,000 or less 0%
$350,001 – $700,000 2.77% of the guaranteed portion
$700,001 – $1 million 3.27% of the guaranteed portion
$1,000,001 – $5 million 3.5% of the guaranteed portion up to $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000
Loan Amount Guarantee Fee (Loans With Maturity of 12 Months Or Less)
$350,000 or less 0%
Greater than $350,000 0.25% of the guaranteed portion

SBA Loan Example

Let’s say you were approved for an SBA 7(a) loan of $35,000 for a term of 10 years. Your lender charges you an interest rate of 7.25%. There would be no upfront guarantee fee. If you were to estimate your payments using an SBA loan calculator, you’d find your payment would be approximately $410 a month.

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How to Qualify for an SBA Loan

To apply for an SBA loan, you must be a qualifying small business meeting the following requirements: 

  • Be a for-profit business
  • Do business in the United States
  • Owner must have equity to invest
  • Must have exhausted financing options
  • Standard 7(a) loans of $25,000 and up require collateral

Keep in mind, certain types of businesses are prohibited from participating in the SBA’s programs, such as real estate investment firms, banks and businesses involved in gambling.

Additionally, you need to work with an SBA-approved lender — funders who have demonstrated a thorough understanding of program requirements.

What Our Lenders Evaluate

At Fast Capital 360, we work with SBA-approved lenders that take the following factors into consideration when reviewing applicants for approval:

  • Credit score
  • Recent bank statements
  • Current year’s financials 
  • Current outstanding debt or loan information

An applicant must demonstrate a history of positive cash flow, with enough capital on hand to sustain operations and cover monthly SBA loan payments and other debt obligations.

SBA loan requirements also stipulate that your track record must be free of recent bankruptcies, foreclosures and open tax liens.

Graphic illustrating the terms for an SBA loan offered through Fast Capital 360’s lending partners

Fast Capital 360 Minimum Qualification

Ready to apply for an SBA loan online? At Fast Capital 360, you can if you meet the following minimum requirements:

  • 650+ credit score
  • 2+ years in business
  • $50,000 or more in annual revenue

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SBA Loans Through Fast Capital 360

What Sets Us Apart

Over the year, thousands of small businesses have trusted us with their financing needs and it shows in our ratings:

“Very happy with their services and great customer service. Fast process!!” – Natalia Bulnes, Google Reviewer

While SBA loans can be tricky for borrowers to navigate, our expert Business Advisors are standing by to ensure a smooth process. They will offer industry guidance and answer any questions you have.

How to Apply

Our online SBA loan application is easy to complete. (Bonus, you’ll see what other financing options you qualify for too.)

Get started in 3 steps:

  1. Tell us about yourself and your business
  2. Attach recent bank statements 
  3. Compare your offers

You’ll be paired with a Business Advisor who will be on hand to answer any questions you have.

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SBA Loan: Frequently Asked Questions

How can I use an SBA loan?

You can use an SBA 7(a) or Express loan in a lot of ways:

  • Real estate 
  • Working capital 
  • Fixed assets 
  • Expansion
  • Equipment
  • Inventory
  • Construction 
  • Renovation
  • Debt refinancing
How long does an SBA loan take to be approved?

The amount of time it takes to finalize a standard SBA loan (from application to funding) varies by lender but is usually between 60 to 90 days.

When you submit an SBA Express loan application, you’ll receive a decision from your lender within 36 hours. Funds can be deposited within your business bank account in as little as 7 days of approval.

What If I’m denied an SBA loan?

SBA loans can be denied for a number of reasons, such as poor credit history, insufficient collateral, existing government loan defaults and character issues, among others. While you could reapply, you may also consider alternative financing solutions, such as less stringent short-term loans or merchant cash advances.

Erin Ryan Social Community Manager, Senior Writer and Editor at Fast Capital 360
Erin has more than 15 years’ experience writing, proofreading and editing web content, technical documentation, instructional materials, marketing copy, editorials, social copy and creative content. In her role at Fast Capital 360, Erin covers topics of interest to small business owners, including sales, marketing, business management and financing.

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