Compare SBA Loans: Choosing the Right SBA Loan for Your Business

The SBA Microloan is generally considered the easiest SBA loan to get approved for, especially for new businesses or those with limited credit history. These loans are issued by nonprofit lenders who often focus more on the borrower's potential and character than just on credit scores. Many intermediaries also provide coaching and support to help applicants become loan-ready. While approval is never guaranteed, microloans are designed to be more accessible and supportive than traditional financing options.

SBA loans differ in loan amount, purpose, structure, and application process. The SBA 7(a) loan is the most flexible and can be used for working capital, equipment, real estate, or business acquisition. The SBA 504 loan is specifically for fixed assets like property, construction, or large equipment, and requires a 3-party funding structure. The SBA Microloan offers smaller amounts (up to $50,000) and is often used by startups or very small businesses. Each program has its own requirements, interest rates, and repayment terms.

Yes, a business can apply for more than one type of SBA loan, as long as the loan purposes are separate and the total financing meets SBA program limits. For example, a business might use a 504 loan to purchase a building and a 7(a) loan for working capital. However, each loan will require a separate application and must meet the eligibility and credit standards of the program. Lenders will also evaluate your overall debt capacity and repayment ability before approving multiple loans.

Yes, the SBA 504 loan is often a better choice for purchasing or constructing real estate. It offers longer fixed terms, lower interest rates, and requires only 10% down in most cases. This structure is ideal for businesses looking to invest in owner-occupied buildings, expand facilities, or upgrade production space. The 7(a) loan can also be used for real estate, but the terms are usually shorter, rates may be variable, and lender policies vary more widely.

There is no official minimum credit score for SBA loans, but most lenders look for a score of at least 650 to 680 for 7(a) and 504 loans. For microloans, lenders are more flexible and may approve applicants with lower scores if other factors—such as a strong business plan or consistent income—are in place. In all cases, lenders evaluate overall credit history, not just the score. A history of responsible borrowing, no recent bankruptcies, and limited delinquencies improve your chances.

Yes. Startups can qualify for SBA loans, especially through the Microloan program and, in some cases, through 7(a) loans. However, because startups have no operating history, the approval process focuses more on the strength of the business plan, the borrower’s experience, and the financial projections. Startups are usually required to provide more documentation and may be asked to participate in training. Collateral or a personal guarantee may also be required.

The SBA 504 loan often comes with the lowest fixed interest rate among all SBA loan programs. That’s because the CDC portion of the loan is backed by long-term government bonds, which helps keep the rate stable and affordable. The 7(a) loan may offer competitive rates too, but they are often variable and depend on the lender. Microloans have slightly higher interest rates due to the smaller loan size and the added support services they provide.

Approval times vary depending on the loan type. SBA Microloans typically take 2 to 6 weeks, while SBA 7(a) and 504 loans can take 4 to 12 weeks, depending on the lender, loan size, and how complete your application is. Some lenders offer expedited review for small loan amounts. Delays usually happen when documents are missing or clarification is needed, so preparing your paperwork ahead of time helps speed up the process.

Not all SBA loans require a down payment, but some do. For SBA 504 loans, a 10% down payment is standard. For SBA 7(a) loans, the requirement varies based on the lender and loan purpose. Some lenders may require 10% to 20% equity for new businesses or riskier projects. SBA Microloans typically do not require a formal down payment, although lenders may ask you to show some investment into your business, such as inventory purchases or equipment contributions.

Yes, SBA 7(a) loans can be used to refinance existing business debt, as long as the refinancing improves your financial position (e.g., by lowering payments or extending terms). The debt must have been used for business purposes and be eligible under SBA rules. You cannot use 504 loans or Microloans for refinancing. Always speak with your lender to confirm whether your current debt qualifies under SBA refinancing guidelines.