SBA Loan vs. Conventional Bank Loan
SBA loans offer longer terms and smaller down payments in exchange for more paperwork and personal guarantees. Conventional loans are faster and lighter but require stronger credit and shorter payback.
The quick answer
For a building purchase, big equipment, or a business acquisition, SBA usually wins on structure. For a straightforward equipment purchase or working capital line at a business already banking with the lender, conventional is faster and cleaner.
Side by side
| SBA Loan | Conventional Bank Loan | |
|---|---|---|
| Down payment | 10%–15% | 20%–30% |
| Term (real estate) | Up to 25 years | 10–15 years |
| Term (working capital) | Up to 10 years | 1–5 years |
| Approval time | 45–90 days | 30–60 days |
| Documentation | Heavy | Moderate |
| Personal guarantee | Required (20%+ owners) | Usually required |
| Prepayment penalty | Yes, first 3 years (7a) | Varies |
When SBA Loan is the right call
- Buying commercial real estate for the shop
- Business acquisition or partner buyout
- $500k+ equipment with long useful life
- You need the longest amortization possible
When Conventional Bank Loan is the right call
- You already bank with the lender and have a relationship
- The purchase is straightforward and under $500k
- You need to close in 30 days
- You don't want SBA paperwork
Bottom line
We work both channels. SBA 504 is the go-to for owner-occupied real estate. 7(a) fits acquisitions and mixed-use projects. Conventional wins on speed for smaller straightforward deals.
Frequently Asked Questions
Other comparisons
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