SBA Loans Small Business Administration Sierra Commercial Capital

We are a California based Broker and Lender with over 25 years of industry experience and expertise to connect your business to the capital it needs.  Our solutions are tailored to fit your needs and circumstances with a wide array of financing options available.

What is an SBA Loan?

SBA loans are business loans guaranteed by the Small Business Administration. With their multiple SBA funding programs, this government agency provides SBA loan guarantees of up to 85% of the loan amount provided through an SBA-approved lender—typically banks. The three main SBA loan programs let you borrow money for nearly any business purpose—including working capital, purchasing inventory or equipment, refinancing other debts, or buying real estate—through these SBA-guaranteed loans.

Maximum Loan Amount
$5K - $5M
Loan Term
5 - 25 years
Interest Rates
Starting at 7.75%

Pros and Cons

  • Lowest down payments
  • Longest payment terms
  • Reasonable interest rates
  • Suitable for a wide range of business purposes

  • Lengthy paperwork
  • Longer approval times
  • May require collateral

Who Qualifies for an SBA Loan?

Securing an SBA loan is no easy feat…
So how can you get one?
As it turns out, many businesses—including small or newer ones—can qualify for an SBA loan. The most important factor will be your credit score: SBA loans are for business owners with strong borrowing histories.
Be prepared: SBA loans usually require a lot of time, energy, attention, and documentation.
Don’t believe any lender who promises to provide SBA loans today: It's definitely not a loan that you'll apply to and receive the funding for even within a few days. That said, SBA loans are certainly fit for growing your business and refinancing your other debt at the lowest available rates.
You might find it difficult to qualify for an SBA loan if your company has a limited track record or, especially, if your credit is poor. After all, the SBA and your lender are sticking their neck out on the belief that you're a reliable borrower.

How Do You Apply for SBA Loans?

There are many large and local banks that offer SBA loans. These bank lenders will have extensive loan applications, looking closely at the financial details of your business. At a minimum, an SBA loan application at a traditional bank will take a couple of weeks to process.
For an easier and quicker process, you can apply online through Sierra Commercial Capital to connect to top SBA lenders like Celtic Bank and Live Oak Bank.

Term Sheet

Documents needed:

  • Driver's License
  • Voided Business Check
  • Bank Statements
  • Balance Sheet
  • Profit & Loss Statements
  • Business Tax Returns
  • Personal Tax Returns
  • Business Plan
  • Business Debt Schedule

How Do SBA Loans Work?

Almost every small business owner wants to know what an SBA loan is, and how to qualify for one. As one of the lowest-cost products out there, SBA loans are the holy grail when it comes to growing your business affordably.
But aren't they impossible to get approved for?

At Sierra Commercial Capital, we've helped thousands of small business owners successfully secure SBA loans. With all that experience—and data—under our belt, we're confident we can give you the information you need to apply for an SBA loan.

By understanding how the product works and what exactly the eligibility requirements are, you'll know if an SBA loan is the right product for your business

SBA Loans: The Fundamentals

The "SBA" in SBA loans stands for the Small Business Administration.

The Small Business Administration is a federal agency dedicated to helping entrepreneurs improve their small businesses, take advantage of contracting opportunities, and get better access to conventional small business loans. We'll focus on the last one here.

The most common misconception about SBA business loans is that the agency lends money to businesses.

The SBA uses federal money to guarantee a percentage of loans administered by traditional banks, so those financial institutions have more incentive to lend money to small businesses.

Simply put, the SBA backs up a portion of the bank's small business loan, meaning less risk for lenders. And less risk for lenders means that more small business owners will be considered for the traditional longer-term, lower-rate financing that comes from banks.

Because of this guarantee, bankers are more inclined to lend you money even if you don't fit their strict credit criteria. They can service a whole different set of customers than usual—without making too many sacrifices.

Applying for an SBA Loan

While SBA loans are slightly easier to qualify for than bank loans, remember: you’re still working with a bank in the end. And banks are nothing if not slow.

At plenty of major banks, getting an SBA loan can still be a lengthy, complicated process. Lenders want to review your credit and financial statements and could expect you to have collateral to secure the loan. They’ll also look at a handful of other documents—from legal documents to business plans.

Even with the government guarantee on their side, many small businesses don’t wind up qualifying for SBA loans. And if they do, the process could take months.

On the other hand, an SBA loan’s low-interest rates and long repayment terms are almost always worth the wait.

What is the actual application like? Here’s the deal:

When applying for SBA financing, you can expect to complete an extensive loan application. You’ll need to provide documents like financial statements, information on your collateral, a description of your business, and a statement of how you’ll use the loan proceeds, among others.

The participating bank will look for applicants with great credit, a solid business plan, profitable businesses (most the time, not always), and a demonstrated ability to repay the loan.

Your borrowing history is especially important to the bank you’re working with for an SBA loan.

How to Choose the Right SBA Loan

There are many different types of SBA loans out there, with 3 programs being the most popular:

The 7(a) Loan Program
The Microloan Program
The CDC/504 Loan Program
How do you know which one is right for you?

The SBA loan program you’ll want to apply for depends on the size, age, and goals of your business.

The most popular program is the SBA 7(a) loan, which works best for most businesses with general financing needs—like expanding working capital, refinancing old debt, or renovating a location. Here are the details of an SBA 7(a) loan:

Up to $5M in loan amount
Repayment terms of up to 10 years (for working capital loans) or up to 25 years (for commercial real estate loans)
For general business financing needs
The CDC/504 loan is another popular program, but a little more specific: A CDC/504 loan is used to purchase major fixed assets—mostly large equipment and commercial real estate. Here are the details of a CDC/504 loan:

Up to $5.5M in loan amount
Repayment terms of 10 or 20 years
For the purchase of major fixed assets
Finally, the third popular SBA loan program is the Microloan program. The SBA offers microloans to small or newer businesses searching for loans under $50K. While these loans are smaller, they’re not really considered short-term loans as term lengths can get extended over a long period of time. Here are the details of SBA microloans:

Up to $50K in loan amount
Repayment terms of up to 6 years
For starting or expanding a small or newer business
If you’re feeling unsure about which SBA loan program makes sense, Sierra Commercial Capital can walk you through your options and help you decide which program is right for you—and whether you’ll qualify.

And if you’re not there yet, we’ll work with you to graduate your business up to an SBA loan—one of the longest-term and most affordable business loan options out there.


  • Purchase or expand a business
  • Purchase real estate or inventory
  • Obtain working capital
  • Finance existing business debt
  • And more


  • Longer terms
  • Lower down payments
  • More flexible qualifying standards
  • Lower debt service requirements

What Will An SBA Loan Cost You?

What’s the bottom line for your business’s bottom line? How much will an SBA loan cost? Well, the cost and repayment of your SBA loan depend on the program you choose. Here are the fees, interest rates, and repayment terms usually associated with each of SBA’s most popular loan programs


A guaranty fee of 1.7% for loans up to $150K, and 2.25% for any SBA 7(a) loan greater than $150K. Be aware that your guaranty fee might be included in the total cost of the loan.
(Remember: the Small Business Administration isn’t lending to you directly—and it doesn’t guarantee 100% of the bank’s loan. That’s why “dollar amount guaranteed” is different from “total loan amount.”)

The SBA charges a guaranty fee for the service of guaranteeing the loan. The lender originally pays the guarantee fee, but it also can just pass that expense on to the borrower.

Some partnered banks might also charge an origination fee or a loan packaging fee, depending on which banks you’re working with.

While the fees seem to make up a fair amount of money, these fees don’t hold a candle to the amount of cash you’re saving by taking on an SBA loan instead of something smaller, faster, and more expensive.

Interest Rates

Maximum of 2.75% + Prime Rate (typically between 5 - 10%).
7(a) SBA loans come with interest rates in either fixed or variable (typically adjusted quarterly) varieties. Your bank lender determines which it will offer.

To protect borrowers, the SBA puts a ceiling on 7(a) loan rates by limiting the “spread” a bank is allowed to apply on top of the loan’s base interest rate.

In other words, the SBA restricts how much a bank can make off your SBA loan.

If your loan amount is more than $50K and the term is less than 7 years, your rate will be set by the Prime Rate and the maximum spread will be at most 2.25 percentage points. For SBA loans of more than $50K and 7 years or longer, your rate will still be determined by the Prime Rate, but that spread increases to 2.75 percentage points. Like all types of loans, the interest rate you end up paying depends on your credit score and the length of your repayment term.

If you choose to apply for an SBA loan through Fundera, however, the banks we partner with offer interest rates of 8.25%, subject to change with the Prime Rate.

And finally, when you get your offer, be sure to calculate your APR. The APR will be different than your interest rate, incorporating any guaranty fees or origination fees you’re charged to get the true cost of the SBA loan.


Up to 10 years for working capital loans and equipment loans, and 25 years for commercial real estate loans.
What would a 7(a) SBA loan mean for your business’s cash flow? You can expect monthly payments for 25 years for real estate, 10 years for equipment, and generally up to 7 years for working capital.

Keep in mind: these are the longest terms you’ll find, giving you plenty of time to figure out how to make each payment and spreading those large, long-term loans over many years

CDC / 504 SBA loan fees are usually about 3 % of the loan amount—and can sometimes be financed with the loan.
Most CDC/504 SBA loans come with total fees of about 3% of the loan amount. Also, be aware that you’ll need to put around 10% of your purchase down to secure 504 SBA financing.

Typically 5 - 6 %.
The SBA’s 504 loan program is one of the most complicated financing products out there.

We’ll give you the short and long of it.

The short story: You can probably expect an interest rate of 5 - 6% on your loan. You won’t know the exact rate until roughly 45 days after the fact, though.

The long story, in case you’re curious: The 504 loan program involves two individual loans—one from a bank (which is 50% of the loan) and one facilitated by a Certified Development Corporation (which is usually 40% of the loan). The latter gets grouped together when all CDCs pool their projects, and through underwriters, auction the pool to investors.

On the one hand, that means you don’t get to know the exact rate until the sale of the pool, which is approximately 45 days after you’ve closed with the CDC.

On the other, historically speaking, you’re pretty set for a pool rate between 4 - 5%. When blended with your bank rate, the total should come out to around 5 - 6%.

It’s complicated, but you don’t really need to worry: it all gets handled automatically.

Maturity terms of 10 and 20 years with the 504 SBA loan program.
Unlike other types of business loans, SBA CDC/504 loans come with either a 10 or a 20 year term.

There are no fees associated with microloans.

Rates range between 8 - 13 % for the microloan program.
Microloans are administered by partnering financial institutions. The institution you work with is the one that sets the interest rate on the microloan, depending on your creditworthiness and the specifics of your small business.

You can expect an interest rate of 8 - 13% on all microloans.

Up to 6 years with monthly repayments.
Loan repayment terms depend on the loan amount, use of funding, and other criteria, but the maximum repayment term allowed for an SBA microloan is 6 years.

As for the repayment schedule: like with other SBA loans, you can expect monthly charges.

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