SBA Loan vs Term Loan: Which Is Right for Your Business?
SBA Loan
Government-backed loans offered through approved lenders with favorable rates and longer repayment terms, but a more rigorous application process.
Term Loan
Conventional business loans from banks or online lenders with a fixed repayment schedule, offering faster funding but typically higher interest rates.
Side-by-Side Comparison
| Feature | SBA Loan | Term Loan |
|---|---|---|
| Interest Rates | 5.5%–8% (variable or fixed) | 7%–30% depending on lender |
| Approval Speed | 30–90 days | 1–14 days (online) or 2–8 weeks (bank) |
| Term Length | Up to 25 years | 1–10 years |
| Loan Amounts | $5,000–$5 million | $5,000–$1 million+ |
| Collateral Required | Often required + personal guarantee | Varies — unsecured options available |
| Minimum Credit Score | 680+ (most lenders) | 600+ (online) or 680+ (bank) |
| Minimum Revenue | $100K+ annual revenue typical | $50K–$250K depending on lender |
| Funding Time | 2–12 weeks after approval | 1–7 days (online) or 2–4 weeks (bank) |
| Total Cost of Capital | Lower due to subsidized rates | Higher, especially from online lenders |
| Best Business Stage | Established (2+ years in business) | Any stage with sufficient revenue |
Our Verdict
SBA loans are the gold standard for established businesses that can afford to wait — you get the lowest rates and longest terms available. However, if you need capital within days or your credit profile does not meet SBA thresholds, a conventional term loan from an online lender gets money in your account far faster. Start your /apply application today and we will match you with the right option.
Best For
SBA Loan
Established businesses with strong credit (680+) that need large amounts at the lowest possible rate and can wait 30–90 days for funding.
Term Loan
Growing businesses that need capital quickly, have less-than-perfect credit, or want to avoid the extensive SBA documentation requirements.
Frequently Asked Questions
Are SBA loans harder to qualify for than term loans?
Yes. SBA loans require more documentation, higher credit scores, and longer business history (typically 2+ years). The government guarantee reduces lender risk, which is why rates are lower, but qualification standards reflect that reduced risk tolerance.
Can I get an SBA loan if I have been denied a term loan?
It is unlikely. SBA loans generally have stricter requirements than conventional term loans. If you were denied a term loan, consider addressing the reason for denial first or exploring SBA microloans, which have more flexible criteria for smaller amounts up to $50,000.
What is the total cost difference over the life of the loan?
On a $250,000 loan over 10 years, an SBA loan at 7% costs roughly $98,000 in interest, while a term loan at 15% costs approximately $234,000. That is a $136,000 difference — significant enough to justify the longer SBA application process for most businesses.
Do both options require a personal guarantee?
SBA loans always require a personal guarantee from anyone owning 20% or more of the business. Term loans vary — bank term loans usually require one, while some online lenders offer unsecured options without personal guarantees for well-qualified borrowers.
How do I decide which to apply for?
If you have strong credit, 2+ years in business, and can wait 30–90 days, start with an SBA loan for the best rates. If you need funds within a week or your credit is below 680, a term loan is the practical choice. Apply through Brevo Capital and we will help you find the best match.
More Comparisons
Explore Funding Options
Ready to Get Funded?
Apply in minutes and get matched with the best financing for your business. No obligations.
Apply Now