To get a small business loan, you need to know how much you need and why, check your personal and business credit, gather two to three years of financial records, and then apply to a lender whose product fits the purpose. Most owners start with a bank, a credit union or an SBA-backed loan, because those usually cost less than online or short-term financing. Approval is far from certain: in the Federal Reserve’s latest survey, only 42% of applicants got the full amount they asked for.
This guide covers the types of small business lending, how much you can borrow, the steps to apply and the rules that changed in 2026. For more explainers, see our money and business guides.
What is small business lending?
Small business lending is any credit given to a business rather than to a person for personal use. It comes in a few common forms, and each one suits a different need.
- Term loan. A lump sum repaid in fixed installments over a set period. Good for a one-time purchase or an expansion.
- Line of credit. You draw money as needed, up to a limit, and pay interest only on what you use. Good for uneven cash flow.
- Equipment financing. The equipment itself serves as collateral, so terms often match its useful life.
- Commercial real estate loan. For buying or building the property the business uses.
- SBA-guaranteed loan. A private lender makes the loan, and the Small Business Administration guarantees part of it. That guarantee lets lenders say yes to borrowers they might otherwise turn down.
Merchant cash advances and invoice factoring also exist. They are not technically loans, and their true cost can be much higher, so read the total payback amount before you sign.
How much can you borrow with a small business loan?
The honest answer is that it depends on your revenue, cash flow and collateral. A lender will usually size the loan so your expected cash flow covers the payments with room to spare. Still, SBA programs set clear upper limits, which make a useful reference.
| Program | Maximum amount | Typical use |
|---|---|---|
| SBA Microloan | $50,000 (average about $13,000) | Startups, inventory, supplies, small equipment |
| SBA Express | $500,000 | Faster decisions, often lines of credit |
| 7(a) Small | $350,000 | Working capital, equipment, buying a business |
| Standard 7(a) | $5 million | Larger expansions, acquisitions, real estate |
| 504 loan | $5.5 million | Buildings, land, long-life machinery |
Figures come from the SBA’s program pages as of October 2026. Microloans run up to seven years, with rates generally between 8% and 13%, according to the SBA microloan page. Banks lending outside SBA programs set their own limits.
How to get small business loans: step by step
1. Define the amount and the purpose
Lenders want a specific number tied to a specific use, for example $80,000 for a delivery van and two months of payroll. Vague requests get declined. Also decide whether you need a lump sum or a revolving line, because that choice points you to different products.
2. Check your credit
For a young business, your personal credit score carries much of the weight. Pull your free reports and fix errors before you apply. If the business already has trade accounts, check its business credit file as well.
3. Gather your documents
Expect to provide most of the following:
- Business and personal federal tax returns, usually for two to three years
- A profit and loss statement and a balance sheet, ideally current within 90 days
- Business bank statements for the last several months
- A business plan with cash flow projections, especially for startups
- Your formation documents, licenses and any lease
- A list of debts the business already owes
Clean statements make this step much easier. If business money still runs through a personal account, our guide on how to open a business bank account explains how to separate it.
4. Compare lenders and offers
Ask at least two or three lenders for terms. In the Fed’s survey, applicants at small banks were the most likely to be fully approved, at 57%. Meanwhile, 60% of firms that borrowed from online lenders said their real borrowing costs turned out higher than expected. So compare the annual percentage rate, all fees and the total repayment amount, not only the monthly payment. The SBA’s free Lender Match tool connects you with lenders that make SBA loans.
5. Apply and answer follow-up questions quickly
Underwriting often includes questions about large deposits, gaps in revenue or old debts. Fast, complete answers shorten the process. SBA loans typically take longer than conventional bank loans because of the extra paperwork.
What lenders look at
Most lenders weigh the same few factors, sometimes called the five Cs of credit.
- Character: your credit history and record of paying debts on time.
- Capacity: whether cash flow can cover the new payment plus existing debt.
- Capital: how much of your own money is in the business.
- Collateral: assets the lender can claim if you stop paying.
- Conditions: the purpose of the loan, your industry and the wider economy.
Expect to sign a personal guarantee. On SBA loans, anyone who owns 20% or more of the business generally must guarantee the loan personally. That means your own assets are on the line if the business cannot repay.
SBA loan rules and rates in 2026
SBA loans are not issued by the government. Instead, the agency guarantees a share of a private lender’s loan, up to 85% for loans of $150,000 or less and 75% above that on most 7(a) loans. Because the lender takes less risk, rates are capped. For variable-rate 7(a) loans, the cap is the base rate plus 3 to 6.5 percentage points, with the highest spread on the smallest loans, per the SBA’s 7(a) terms and eligibility page.
The base rate is usually the prime rate, which banks set at 3 points above the top of the Federal Reserve’s target range. On September 16, 2026, the Fed raised that range to 3.75% to 4%, so the prime rate moved to 7%. In practice, a large variable-rate 7(a) loan could therefore cost up to about 10% before fees. Rates move with Fed policy, which in turn reacts to rising prices; our explainer on what inflation is covers that link.
Eligibility also tightened. Since March 1, 2026, 100% of the direct and indirect owners of a 7(a) or 504 applicant must be US citizens or US nationals whose main home is in the United States, under an SBA policy notice. Green card holders can no longer own any share of an applicant. The business must also be a for-profit company operating in the US, meet SBA size standards and show it cannot get credit on reasonable terms elsewhere. These rules have changed several times since 2025, so confirm the current version with your lender.
If you are turned down
A rejection is common and often fixable. Ask the lender for the specific reason in writing. Common fixes include paying down personal credit card balances, waiting until the business has two full years of tax returns, asking for a smaller amount or offering more collateral.
Meanwhile, free help is available. Small Business Development Centers and SCORE mentors, both supported by the SBA, review loan packages and business plans at no charge. Then apply again with a stronger file. This guide is general information, not financial advice; loan terms depend on your situation and the lender.
Frequently asked questions
How much small business loan can I get?
It depends on cash flow, credit and collateral. SBA programs range from microloans of up to $50,000 to standard 7(a) loans of up to $5 million.
Can I get a business loan with no revenue?
It is hard but possible. Startups often begin with SBA microloans, equipment financing or a loan backed by the owner’s personal credit and collateral.
How long does it take to get a small business loan?
Conventional bank loans often take a few weeks. SBA loans usually take longer because of extra documents and review, while online lenders can fund in days at a higher cost.
Do I need collateral for an SBA loan?
On 7(a) Small and SBA Express loans of $50,000 or less, collateral is not required. Above that, lenders follow their own collateral policies, but they cannot decline a loan only because collateral is short.
Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.
Sources
- sba.gov/funding-programs/loans/7a-loans
- sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligib…
- sba.gov/funding-programs/loans/microloans
- sba.gov/funding-programs/loans/504-loans
- sba.gov/loans/lender-match
- fedsmallbusiness.org/reports/survey/2026/2026-report-on-employer-firms
- federalreserve.gov/monetarypolicy/files/monetary20260916a1.pdf
- gao.gov/products/b-338157
- ecfr.gov/current/title-13/chapter-I/part-120