A Small Business Administration (SBA) 7(a) is a loan program that allows financial institutions to provide loans for small businesses with flexible and favorable terms. SBA loans are backed by the federal government up to 85%, allowing lenders to consider more candidates who may not be approved otherwise. SBA 7(a) loans can be used for working capital, equipment purchase, real estate purchase, debt refinance, and more.
How do you qualify for an SBA loan?
Whether you are applying through an SBA lender or loan program, all applicants must meet the same basic eligibility requirements set by the SBA.
Location. A business must be physically located in the U.S. or its territories, doing business or proposing to do business.
Ownership. As of March 1st, 2026, the business must be 100% owned by U.S. citizens or nationals. Ownership of the business cannot exceed 20% by an individual who is currently incarcerated, on probation, parole or a defendant in a criminal case.
Operations. A business must be operating for profit and operating legally in the U.S. with official registration.
Business Size. The SBA defines small businesses by the revenue they bring in each year and the number of employees. The SBA’s Table of Size Standards offers size requirements for businesses in each industry according to the NAICS code.
Financing Need. Applicants must be able to demonstrate a need for the loan and show they were not successful in securing funds through a non-Federal, non-state, or non-government source.
Trustworthiness. Applicants must have a history of responsible financing practices, with no prior history of delinquencies on a previous government debt.
What disqualifies you from an SBA loan?
The SBA also has a list of ineligibility disqualifications for financing. Disqualifications include operating in an ineligible industry or having filed for bankruptcy more than three times. Before applying for an SBA loan, make sure you review all eligibility requirements and disqualifications.
For a full list of SBA loan disqualifications, read our previous blog, What Disqualifies Small Businesses from an SBA Loan?