- SBA 7(a)
- Small Business Administration's flagship loan program. Up to $5M, 10–25 year terms, 8.5%–11.5% rates (2026). The SBA guarantees 75–85% of the loan to the bank.
- SBA microloan
- Up to $50K, 4–6 year terms, 8%–13% rates. Faster close (2–4 weeks) than 7(a) but capped on size.
- Equipment financing
- Loan or lease secured by the equipment itself. 5.99%–24% APR, 24–84 month terms, 24–72 hour close. No SBA guarantee.
- Personal guarantee
- You personally guarantee repayment if the business defaults. Standard for both SBA and equipment financing under $250K.
8.5%–11.5%SBA 7(a) Rate (2026)
5.99%–24%Equipment Financing Rate
4–8 weeksSBA Close Time
24–72 hoursEquipment Financing Close
Up to 25 yrsSBA Max Term
84 monthsEquipment Max Term
Rate vs speed — the actual decision
SBA 7(a) at 9% over 10 years on $200K = $2,533/mo, $103,953 total interest. Equipment financing at 12% over 7 years on $200K = $3,530/mo, $96,520 total interest. SBA wins on monthly (lower) but loses slightly on total interest because of the longer term. Speed is the bigger factor: SBA 4–8 weeks vs equipment financing 24–72 hours. If your equipment install timeline is tight, equipment financing wins by default.
When SBA actually wins
SBA wins when: (a) you have 4–8 weeks of timeline flexibility, (b) the loan is large ($150K+), (c) you want the longest possible term to minimize monthly payment, (d) you're combining equipment + working capital + leasehold improvements in one loan, (e) you have 2+ years in business and clean financials. SBA loses on: speed, doc requirements, and per-application cost (you'll spend 20–40 hours on the application).
When equipment financing wins
Equipment financing wins when: (a) your install timeline is under 30 days, (b) the loan is small ($25K–$100K), (c) you're a startup or first-year operator (SBA's underwriting is harsher on time-in-business than equipment lenders), (d) your credit is 580–650 (sub-prime equipment lenders work; SBA usually doesn't), (e) you only need to finance equipment, not a full build-out.
The hybrid strategy most multi-unit operators use
Open with equipment financing (fast close, equipment delivered Q1). Refinance into SBA 7(a) at month 12–18 once you've cleared the time-in-business threshold. Net cost of the temporary equipment-financing rate (12 months at maybe 4–6% above SBA) is usually $5K–$15K — worth it if your alternative was waiting 8 weeks for the SBA close and missing your opening date.
What the SBA application actually looks like
SBA Form 1919 (borrower information). Form 1920 (lender's report). Personal financial statement. Last 3 years of personal tax returns + business tax returns if available. Business plan with 12-month projections. Resume. Use of funds breakdown. Equipment quotes. Lease/property info. Business debt schedule. The packet is typically 80–150 pages. Plan 20–40 hours of prep work.
| Factor | SBA 7(a) | SBA Microloan | Equipment Financing | EFA |
|---|
| Max Loan | $5M | $50K | $500K typical | $250K typical |
| Rate Range (2026) | 8.5%–11.5% | 8%–13% | 5.99%–24% | 7%–20% |
| Term | Up to 25 yrs | 4–6 yrs | 24–84 mo | 24–60 mo |
| Close Time | 4–8 weeks | 2–4 weeks | 24–72 hrs | 3–5 days |
| Min Time in Biz | 2+ yrs preferred | Often 0 | 0–1 yr | 0–1 yr |
| Min Credit | 650+ | 620+ | 580+ | 620+ |
| Best For | Large, planned, long-term | Startup, small loans | Speed, equipment-only | Restaurant standard |
