SBA 7(a) Loan: What It Is and How to Get One

An SBA 7(a) Loan is a financing program specifically designed to help small business owners get the funding they need to grow their business and create jobs in their local economies. These loans provide the funds for a wide range of expenses, from inventory and equipment purchases to expanding operations and business acquisitions.

The unique thing about these loans is that they are backed by the U.S. Small Business Administration (SBA). While the SBA does not directly issue the loans, it partners with lenders who do. Because the loans are backed by the government, this allows the lenders to offer more favorable terms – like fully amortizing loans (no balloons) and terms up to 25 years, depending on use of proceeds- to borrowers because the risk is minimized.

Below, we outline the key features and qualifiers for an SBA 7(a) Loan and how to apply for one.

Features of an SBA 7(a) Loan (as of June 2025)

Loan Amount: Up to $5 million

Uses: Real estate and building purchase and improvement (including purchase of furniture and fixtures), new construction, expansion, short-and long-term working capital, inventory, refinance debt, machinery and equipment, mergers, acquisitions, and partner buy-outs

Repayment Terms: Terms from 10-25 years, depending on the use of funds

Interest Rates: SBA 7(a) loans can have either fixed or variable rates. Fixed interest rates make monthly payments predictable and can protect you if rates spike in the future, while variable rates have the possibility of saving you money over time if rates lower. Either way, competitive rates are capped by the SBA, so these loans are often more affordable than a conventional business loan.

Down Payment: Typically between 10%-25%

Processing Time: As with all loans, time frames vary. But the beauty of working with an SBA Preferred Lender is that we do this day in and day out. We know all the right questions to ask to streamline the process and make sure you’re compliant with all requirements from the start.

How to Get an SBA 7a Loan

1. Qualify:

• Be a for-profit and owner-occupied business in the U.S. or its territories.
• Have a net worth of less than $20 million and an average net income under $6.5 million after taxes for two years preceding your application.
• You as the business owner, must demonstrate good character, your business must demonstrate creditworthiness, and have the ability to repay the loan based on cash flow projections.
• The loan project must meet job creation goals or public policy objectives.
• Not be a type of ineligible business
• Not be able to obtain the desired credit on reasonable terms from non-Federal, non-State, and non-local government sources

2. Apply:

• Gather all the necessary documents. This includes tax returns, personal financial statements, interim financials, purchase agreements, and your business plan.
• Schedule an appointment with our dedicated SBA department so we can walk you through the loan application process. With you, we’ll determine loan amount, repayment terms, and use of funds.

3. Approval:

• Your loan application is reviewed and decided on locally. We process your application, ensure eligibility, perform a credit assessment, and underwrite your loan, all in-house.

4. Closing:

• Once approved, you are notified, and we finalize your loan terms.
• Closing agreements are signed, and funds are disbursed.

The structure of the SBA 7(a) Loan balances the risk between lenders, borrowers, and the government, which allows lenders to offer more accessible capital for those who might not qualify for other avenues of financing. When you come to Texas First Bank for an SBA Loan, you can be confident that you’re working with industry experts who can guide you through each step of the loan process.

What does it mean to get an SBA loan from Texas First Bank, an SBA Preferred Lender?

As an SBA Preferred Lender, we have been given the authority to make final credit decisions and approve loans on behalf of the SBA. We handle loan applications and approvals in-house and don’t have to send your application off to the SBA for a decision. The result is a smoother and shorter process for you and your business.

 

Loans subject to approval.