Key takeaways:
- SBA 7(a) loans offer flexible, long-term financing for acquisitions, expansions, real estate and working capital.
- 90% of U.S. businesses qualify, making SBA financing far more accessible than many owners expect.
- Comerica’s Preferred Lender status accelerates the process, providing faster decisions and tailored guidance for business growth.
Growth requires capital. Whether you’re expanding facilities, acquiring a competitor or building a stronger balance sheet for the next quarter, businesses need a strong financing strategy to fund major moves.
But when it’s time to secure funding, many businesses overlook one of the most flexible tools available, the
SBA 7(a) loan.
Designed to help businesses access capital on favorable terms, SBA 7(a) loans can cover everything from working capital to real estate. And they’re not just limited to new business development; they’re built to help even established companies finance business acquisitions, partner buyouts, financing for expansion, equipment or construction. All while preserving liquidity.
In this article, we’ll explain how SBA 7(a) loans work, who qualifies and how Comerica, as a National SBA Preferred Lender, helps businesses navigate the process with confidence.
In 2024, the SBA supported over 103,000 loans totaling $56 billion.
What Is an SBA 7(a) Loan?
The SBA 7(a) Loan Program is the U.S. Small Business Administration’s primary business lending program. The SBA does not lend directly; instead, it guarantees a portion of the loan made by a bank such as Comerica.
The SBA guarantee gives businesses access to financing that may be harder to secure through a conventional loan structure, especially when they want longer terms, lower down payments or a more flexible approach to collateral.
How SBA 7(a) loans are structured
- Maximum loan amount: Up to $5 million.
- Typical terms:
- Up to 10 years for working capital, business acquisition, partner buyout, business expansion, construction and equipment
- Up to 25 years for real estate.
- Repayment: Monthly principal and interest payments, supported by business cash flow.
- Rates: Based on Prime plus an allowable SBA spread.
With an SBA guarantee in place, more businesses can qualify for financing.
What can an SBA 7(a) loan be used for?
SBA 7(a) loans are intentionally broad. The program is built to support the full range of growth actions a business might make.
Here are common ways owners put financing to work:
Business expansion and acquisition
- Finance a merger or purchase of another company to grow market share.
- Support partial or full ownership changes (a recognized use under SBA guidelines).
Real estate and facility improvements
- Purchase, build or renovate owner-occupied facilities.
- Combine real estate and equipment financing under a single loan structure.
Equipment and inventory
- Fund machinery, technology systems or specialized equipment essential to operations.
- Support inventory loading for seasonal or high-growth periods.
Working capital and cash-flow management
- Cover operating expenses and supplier costs without depleting reserves.
- Refinance short-term debt to improve liquidity and stabilize cash flow.
These examples point to a single theme: adaptability. And that’s how Comerica’s SBA team sees it. “We’ve seen clients of all sizes use SBA financing,” says Benjamin Stone-Walsh, Group Manager for SBA Lending at Comerica. “It’s a flexible program designed to meet businesses where they are.”
Many business owners are surprised to learn just how many needs the 7(a) program can support.
How SBA loans compare to traditional financing
SBA 7(a) loans and conventional loans serve different needs, and the best choice for your business typically depends on timing, collateral and long-term goals.
Traditional loans can be a strong fit when your collateral aligns easily with the request or you need funds quickly for a short-term project.
SBA financing often makes more sense when you want longer repayment terms, prefer to preserve cash for operations or are looking for a structure that provides more flexibility during a growth phase.
Key benefits of an SBA 7(a) loan include:
- Longer terms: Up to 10 years for equipment, acquisitions or working capital, and up to 25 years for real estate.
- Lower down payments: Often around 10%, allowing businesses to keep more liquidity on hand (with some loan types eligible for up to 100% financing).
- Flexible collateral: SBA guidelines allow lenders to use a broader mix of assets, helping more businesses qualify.
- No balloon payments: You repay gradually over the full term, avoiding a large lump-sum payoff at the end.
Not sure which route makes sense? A small business banker can walk you through the pros and cons of SBA and traditional financing.
Who qualifies for an SBA 7(a) loan?
Nearly 90% of U.S. businesses qualify for SBA financing, so most owners are already closer to funding than they think.
General eligibility includes:
- For-profit, U.S.-based business: The company must be legally operating in the United States.
- Meet SBA size standards: Most businesses with fewer than 500 employees or within applicable revenue limits qualify.
- Ability to repay: Lenders look for sufficient cash flow and an acceptable credit history.
- Credit elsewhere test: The business must show it cannot obtain similar credit on reasonable terms through a conventional loan.
Notably, a handful of industries, including nonprofit and banking, are excluded from SBA programs. Review the SBA’s official ineligible-industry list here before applying.
How Comerica supports the SBA process
As a National SBA Preferred Lender, Comerica has the authority to make credit decisions in-house, which means faster answers and fewer handoffs for business owners.
Our specialists have helped thousands of businesses successfully secure SBA financing by structuring loans that match their cash flow and growth goals.
“We simplify a complex process,” says Benjamin Stone-Walsh. “And as a Preferred Lender, we can make decisions quickly and help businesses move forward with confidence.”
Looking for capital to grow your business?
Let’s discuss if SBA financing is a strong fit for your business’s next move. Connect with a Comerica lending professional today.
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