How to Get an SBA Loan in 2025—Even With Tougher Rules

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1. Feature: How to Get an SBA Loan in 2025—Even With Tougher Rules
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Tariffs are squeezing small and mid-sized businesses in 2025, with 145% levies on Chinese imports and 10–25% on goods from Canada and Mexico. Costs are spiking. Access to capital? Tighter. For founders navigating this new landscape, the SBA’s 7(a) loan program remains essential—but getting funded is no longer as easy as it was in 2023–2024.

This article breaks down what’s changed, when it takes effect, and how to practically prepare—whether you're running an AI startup or a family bakery.

The 7(a) Loan Program: Then and Now

Then: Since 1953, the SBA’s 7(a) loan program has guaranteed financing through private lenders for businesses that don’t qualify for traditional loans. Borrowers could access up to $5 million in working capital, real estate, or refinancing, with SBA guarantees covering 75–85% (90% for exporters). Terms extended up to 25 years for real estate and 10 for working capital.

In FY 2024, the SBA approved 70,242 loans totaling $31 billion, with an average size of $443,097. The Biden-era “Do What You Do” policy eased underwriting for loans under $500,000, increasing accessibility—but defaults doubled, according to the SBA in April 2025.

Now: The 7(a) loan cap and guarantee percentages remain the same, but SOP 50 10 8 (released April 22, 2025) reintroduces strict underwriting standards—including 10–20% equity injections and full repayment analysis. Lender fees are back to cover a $460 million shortfall.

Sub-programs like SBA Express (up to $500,000, 50% guarantee) and the Working Capital Pilot (up to $5 million) still exist but target more specific needs.

A major shift: all M&A loans must include seller equity rollovers to qualify for a 7(a) guarantee. Zero-down deals are largely gone.

Regulation Status: What’s Final and When It Starts

• April 22, 2025: SOP 50 10 8 rules finalized

• June 1, 2025: M&A equity rollover and zero-down restrictions begin

• January 1, 2025: Beneficial Ownership Information (BOI) required for all new loan applicants

• March 2025: Lender fees reinstated

• April 1, 2025: CFPB demographic data collection begins for mid-volume lenders

• January 17, 2026: All stricter underwriting standards take full effect

Fee details are available via the SBA’s 2025 fee schedule.

What This Means for SMBs: Challenges and Opportunities

• Stricter Underwriting

Challenge: Lenders now require 10–20% equity injections. That means a startup seeking $50,000 must show $5,000–$10,000 in cash reserves. Vistage data shows 40% of SMBs face loan access barriers in 2025.

Opportunity: The crackdown protects the $31 billion program’s long-term viability, rewarding applicants with strong financials and consistent cash flow.

• Higher Fees

Challenge: SBA reinstated fees in March 2025—expect $2,000–$3,000 in upfront costs for a $100,000 loan. These hit retail and restaurant businesses especially hard.

Opportunity: These fees are sustaining the program. Businesses with stable revenue (e.g., engineering or logistics firms) still benefit from lower rates than conventional credit.

• M&A Lending Limits

Challenge: Starting June 1, 2025, seller equity rollovers are required, and zero- down deals are severely limited. A $500,000 acquisition now typically requires $100,000 in buyer equity or rollover.

Opportunity: These changes raise the bar for acquirers, reducing lender risk and improving funding access for well-prepared buyers.

• BOI & Demographic Reporting

Challenge: As of January 1, 2025, all 7(a) borrowers must submit a BOI report to FinCEN—30–60 minutes of added admin work. Errors or missed filings can result in $10,000+ fines.

Opportunity: These steps streamline ownership verification and could increase access for minority-owned businesses as lenders track and report lending equity data.

• SBA Staffing Cuts

Challenge: In March 2025, the SBA cut its staff by 43%. Approval times for non- preferred lenders have slowed to 8–10 weeks.

Opportunity: Preferred lenders (PLPs) can still approve loans in 2–4 weeks thanks to delegated authority. Strategic lender choice is now mission-critical.

How to Find the Right Lender and Apply

Where to Look

• SBA Lender Match: Free, fast (5 minutes), and tailored. Results in 48 hours.

• Preferred Lenders (PLP): Chase, Wells Fargo, First Internet Bank—faster approvals, deeper experience with 7(a).

• Community Banks: Local banks often fund SBA loans for new LLCs quickly and with more flexibility.

What to Look For in a Lender

• High 7(a) volume

• Low and transparent fees

• PLP status for faster approvals

• Experience with startups or your business model

Action Step: Call or email 2–3 lenders.

Ask:

“What’s your average approval time for a $100,000 7(a) loan?”
“Do you work with early-stage businesses?”
“What kind of equity or collateral do you require?”

What to Expect in the Loan Process

Application

Time: 1–2 hours
What’s Reviewed:

• Credit score (625+ is ideal)

• Revenue ($50,000 minimum is common)

• Liquidity and equity (10–20%)

Underwriting

Lenders analyze:

• Cash flow (1.15x debt service coverage ratio)

• Collateral (business assets, equipment)

• BOI filing

• Demographic data (race, gender)—collected but firewalled from credit decisions

Fees and Rates

• Expect $2,000–$3,000 on a $100K loan

• Interest rates: 7–10% (SBA-capped)

• Personal guarantees: Required

• Processing: 2–4 weeks (PLP), 6–10 weeks (non-PLP)

How to Prepare and Boost Approval Odds

1. Track Net Cash (10 minutes)

Use The Co Letter’s Net Cash Spreadsheet. Aim for $50,000+ in liquidity. A good benchmark: 4–6 months of operating expenses in reserves.

2. Gather Documents

• Business plan

• 2 years of business (or personal) tax returns

• QuickBooks exports of financials

• BOI filing (by Jan 1, 2025)

• ID and proof of revenue

• Proof of equity or liquidity

3. Contact Lenders (30–60 minutes)

Use SBA Lender Match or call lenders directly. Apply to 2–3 institutions to compare terms and timelines.

4. Work With a Lawyer (30 minutes, ~$200)

Have a professional review the loan agreement—watch for deposit traps, liens, and auto-renew clauses.

5. Follow Up Weekly

Lenders are busier than ever. Set a weekly check-in to keep your application on track.

Final Tips

• Show strong net cash and expense coverage

• Highlight revenue sources and use-of-funds clearly

• File BOI early to avoid delays

• Be ready with demographic data (takes 5 minutes)

• Choose PLP lenders for speed and predictability

Bottom Line

The SBA 7(a) program is still open for business—but not for everyone. If you can prove strong financials, prep your documents, and partner with the right lender, funding is still well within reach.

It’s no longer about who needs a loan. It’s about who’s ready for one.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!