SBA rules · SOP 50 10 8.1
How much of an SBA loan does the SBA guarantee?
For 7(a) loans, SBA guarantees between 50% and 90% depending on the loan program and amount, while for 504 projects, SBA guarantees 100% of the debenture, which funds up to 30% to 40% of eligible project costs.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Standard 7(a), 7(a) Small, CAPLines, and MARC: SBA guarantees up to 85% for loans of $150,000 or less, and up to 75% for loans over $150,000, subject to an aggregate maximum SBA guaranty of $3,750,000 across all loans to a borrower and its affiliates.
- SBA Express and Export programs: The guaranty percentage is 50% for SBA Express loans, up to 90% for loans of $350,000 or less and 75% for loans over $350,000 up to $500,000 under Export Express, and 90% up to a $4,500,000 guaranty limit for Export Working Capital Program (EWCP) and International Trade (IT) loans.
- Multiple 7(a) loans within 90 days: When two or more 7(a) loans are approved within 90 days of each other, the gross loan amounts are combined; if the combined gross amount exceeds $150,000, the guaranty percentage on the combined loans cannot exceed 75%.
- 504 Debenture guaranty: In the 504 program, SBA guarantees 100% of the debenture issued by the Certified Development Company (CDC).
- 504 Project financing portion: The 504 debenture finances up to 40% of eligible project costs in a standard structure, up to 35% if the project involves a new business or a limited/special purpose property, and up to 30% if the project involves both a new business and a limited/special purpose property.
The source
What the SOP says
“The maximum guaranty percentage is: 85% for loans of $150,000 or less 75% for loans over $150,000
“For SBA Express loans: 50%.
“The maximum guaranty percentage is: 90% for loans of $350,000 or less; and 75% for loans over $350,000 up to $500,000.
“The maximum guaranty amount is $4,500,000. The guaranty percentage is 90 percent.
“For multiple 7(a) loans approved within 90 days of each other, the gross dollar amounts of the loans are combined. If the combined gross amount exceeds $150,000, then the percentage of guaranty on the combined loans must not be more than 75 percent (subject to the $3,750,000 limit).
“A 504 project has three main partners and generally: a Third Party Lender provides 50% or more of the financing; a Certified Development Company (CDC) provides up to 40% of the financing through a 504 debenture (guaranteed 100% by SBA); and an applicant (Borrower) injects at least 10% of the financing (13 CFR §§ 120.801 and 120.900).
“New businesses must contribute at least 15%. The Debenture will finance no more than 35% of the Project and at least 50% of the Project financing will be from banks or other financial institutions, state or local government, or foundations or other non-profit institutions.
“If a Project will finance both a New Business and a Limited or Special Purpose Property, the Applicant must contribute at least 20% of the Project cost. The Debenture will finance no more than 30% of the Project and at least 50% of the Project financing will be from state or local government, banks or other financial institutions, foundations or other non-profit institutions.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.