SBA Loan
A small business loan partially guaranteed by the Small Business Administration.
SBA loans are business loans made by approved lenders but partially guaranteed by the US Small Business Administration, reducing lender risk and enabling better terms for borrowers. The most popular is the SBA 7(a) loan (up to $5 million for general business use). SBA loans typically offer lower rates and longer terms than conventional loans but have more paperwork and longer approval times.
Example
A restaurant applies for an SBA 7(a) loan of $350,000 at 7% with a 10-year term to expand into a second location, benefiting from the SBA's guarantee to secure the favorable rate.
Why It Matters for Your Business
SBA loans offer some of the best terms available to small businesses, making them worth the extra paperwork for significant financing needs.
Practical Tips
- •Work with an SBA-preferred lender to speed up the approval process.
- •Prepare a detailed business plan and financial projections—SBA lenders scrutinize these closely.
Related Terms
More Banking Terms
ACH
Automated Clearing House - an electronic network for financial transactions.
APR
Annual Percentage Rate - the yearly cost of borrowing including fees.
APY
Annual Percentage Yield - the real rate of return on savings including compound interest.
Bank Reconciliation
Matching bank statements with internal records to identify discrepancies.
Business Checking
A bank account designed for business transactions.
Related Financial Guides & Resources
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