SBA loan vs conventional business loan — which is better?

Detail

SBA 7(a) loans are partially guaranteed by the federal government (75–85% of principal), which lets the lender extend longer amortizations and lower rates than they otherwise could. The trade-off is a more rigorous documentation process and a 21–45 day timeline. Conventional term loans rely entirely on the lender's balance sheet, so they're faster (5–10 days) and more flexible on use of funds, but typically carry shorter terms (1–7 years) and higher rates. The right answer depends on your timeline and use of proceeds.

Key facts

• SBA 7(a): 10–25 yr terms, Prime + 2.25%–4.75%, 21–45 days
• Conventional term: 1–7 yr terms, 9.9%+, 5–10 days
• SBA = cheaper, slower. Conventional = faster, costlier.