SBA loans may require an initial investment or down payment from the borrower. This is usually expressed as a percent of the total amount of the loan. The SBA or lender may look at a down payment as an indication that the borrower is willing to put their own money into the business, and will […]

SBA loans may require an initial investment or down payment from the borrower. This is usually expressed as a percent of the total amount of the loan. The SBA or lender may look at a down payment as an indication that the borrower is willing to put their own money into the business, and will repay the loan in accordance with the contract.

Minimum down payment for SBA loans

SBA loan program

Maximum loan amount

Down payment

Standard 7(a) loans

$5 million.

10% minimum.

CDC/504 loans

$5.5 million.

10% to 20%.


$5 million.

Export loans

$500,000 or $5 million, depending on the specific loan program.

SBA disaster loans

$2 million.

The lender may vary in their requirements for down payments and loan terms.

Down payment for SBA Loan 7(a).

SBA 7(a), loans are available for many purposes, including working capital and debt refinancing. They can also be used to purchase real estate, equipment, or start another business. Borrower down payments or investment requirements can be required for some subcategories.

  • SBA Standard 7(a). This type of loan can be used for the purchase of a small business. The lender can decide whether or not to require a deposit in other cases. SBA loans 7(a), which are standard, offer up to $5,000,000.

  • SBA Express Loans: It is up to the lender to decide whether or not to ask for a deposit on an SBA Express. If the lender demands a downpayment on non-SBA loans, they must do so for SBA loans. The SBA 7(a), which is a type of loan that has faster approval times, caps the loan at $350,000.

Below are some 7(a), specialized loan programs which do not require a down payment.

Down payment for SBA CDC/504 Loan

SBA CDC/504 loan typically requires a minimum 10% downpayment from the borrower. These loans are offered by the SBA in partnership with Certified Development Companies. They can be used to purchase commercial property, renovate or build it, or buy heavy equipment. The loan amounts are up to $5 million.

To fully fund this loan, two lenders are combined with a downpayment.

  • The traditional banks, credit unions or other lenders will provide up to 50% of your loan.

  • Typically, the owner will fund 10% of the final loan amount through a downpayment.

In order to qualify for an SBA loan 504, a company must be a profit-making business operating in the U.S. and its territories. It also needs a net tangible worth less than 15 million dollars, as well as an annual net income less than 5 million dollars after tax.

No down payment SBA loan

Some SBA loan programs, such as some 7(a), are designed to allow you to skip the down payment. This usually happens because of the small amount being offered or the fact that the programs were designed to meet very specific needs.

Microloan SBA

SBA microloans are a great option for businesses that need a smaller amount of money. SBA Microloans can be up to $50,000 for businesses that are not nonprofits and those who are.

SBA Microloans can help you rebuild, expand or repair your business. The funds are used to purchase working capital, inventories, furniture, machinery, and equipment. The loan proceeds cannot be used for real estate purchases or to pay down existing debt.

In general, to qualify for an SBA Microloan you will need some form of collateral. However, each lender has its own credit and lending requirements. SBA Microloans can be applied for at nonprofit organizations designated by the SBA as intermediary lenders.

SBA CAPLines program

SBA CAPLines, a 7(a), subcategory, provides lines of credit for small business to help them meet their cyclical and short-term needs. The SBA can offer lines of credit up to $5 million.

Your business must also meet all the requirements for SBA 7(a). You may have to meet additional criteria depending on which CAPLines products you apply for.

Export loans

SBA Export Loans are another form of 7(a), and they help businesses to expand exports. They also assist them in conducting international business transactions, as well as entering new markets abroad.

In order to be eligible for a SBA Export Loan, you must either be exporting products or services abroad or be in need of modernizing your operations to be competitive with foreign firms.

SBA disaster loans

A business can use an SBA Disaster Loan to recover after a declared catastrophe or when they lose a key employee. SBA offers three different types of disaster loans. None of them require any down payments.

Is a downpayment required on an SBA Loan?

The down payment requirement can vary depending on the type of loan and how the funds are used. The SBA, for example, requires a 10% down payment on a 7(a), standard loan when used to purchase a small business. This is not always the case. The SBA allows lenders to determine whether a borrower must make a deposit in the Express Loan Program, as long as it is consistent with how the lender processes non-SBA loan applications.

The SBA prefers that borrowers use their own funds to start or buy a company, or purchase real estate, machinery, or other assets. A down payment may be less necessary for business lines of credit, which will provide working capital and disaster loans that are intended to assist a company in recovering.

Why are SBA loan downpayments required?

Both the SBA and the lenders that it partners with know the small business owners who invest their time and money into the venture are more likely than not to repay the entire loan.

Due to the partial guarantees, the SBA as well as the intermediary lenders have a lot to lose in the event that borrowers fail to pay. Both the SBA, and its intermediaries are interested in knowing that the borrower also has something at stake before taking on this risk.


How can you obtain a downpayment for an SBA Loan?

There are many options for down payments, including personal savings, personal loans, investors or partners in business, retirement plans such as 401(k), Rollovers for Business Startups, the sale of assets for your business, refinancing your mortgage, or other types of loans.

No money down SBA loans are available.

Export loans, disaster loans, and SBA microloans do not require any down payment.

How difficult is it to obtain an SBA loan approval?

SBA loans are easier to qualify for than conventional bank loans, although they can still be difficult to obtain. Microlending and online business loans are also options to consider. However, they usually have higher rates of interest and shorter terms.

This article was originally published on Fundera. Fundera is a NerdWallet subsidiary.