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Back to Glossary Terms

SBA Backed Loan

An SBA backed loan is a loan extended to a small business by a bank or other lender with up to 80 percent of the principle guaranteed by the U.S. Small Business Administration.

An SBA backed loan is a loan extended to a small business by a bank or other lender with up to 80 percent of the principle guaranteed by the U.S. Small Business Administration.

The SBA offers a number of loan programs to encourage lenders to work with small businesses that might otherwise seem like too much of a risk. By backing the principle, the lender’s risk is reduced, and small businesses have improved access to financing.

The different types of SBA backed loans include:

  • 7(a) loans, which are the most popular type of SBA loan, can be used for non-specified general business purposes, such purchasing inventory, investing in real estate, and buying equipment.
  • CDC/504 loans can be used for major fixed assets like real estate and equipment, up to $5 million.
  • Disaster loans are for businesses that need to repair or replace items that have been damaged in a declared disaster, or for businesses that have otherwise experienced economic hardship because of a disaster.