SBA Loan Down Payment Guidelines
SBA Loan Down Payment Guidelines
SBA down payment requirements vary based on the lender and the loan type. While the SBA requires a minimum down payment of 10% on certain loans, down payment requirements are more often set by individual lenders. These down payments may reach as high as 30% for startups and businesses seen as high-risk.
Though some SBA loan programs require no down payment at all, providing one can often unlock lower interest rates and more flexible repayment terms.
SBA loan down payment requirements
Backed by the U.S. Small Business Administration (SBA), the SBA loan program provides funds to help small business owners tackle a range of business expenses. While the SBA imposes certain guidelines, such as capped interest rates and terms, you must apply directly through an SBA-approved lender like a bank, credit union or online lender.
Lenders typically determine your SBA down payment, also called an equity injection, based on the loan type, the company’s age and cash flow and the value of any collateral you’re providing. Though down payment requirements can vary between lenders, here’s a breakdown of what you could expect to pay based on the minimums set by the SBA.
| SBA loan program | Loan amount | Minimum down payment |
|---|---|---|
| SBA 7(a) loans | Up to $5,000,000 | 10% for startups and/or businesses using the loan for a complete change of ownership |
| SBA 504/CDC loans | Up to $5,500,000 | 10% to 20% |
| SBA CAPLines | Up to $5,000,000 | 10% for startups |
| SBA Express Loans | Up to $500,000 | None |
| SBA disaster loans | Up to $2,000,000 | None |
| SBA microloans | Up to $50,000 | None |
SBA 7(a) loan down payments
Your down payment for most 7(a) loans can be anywhere from 0% to 30% or higher, depending on the lender you choose.
The SBA requires at least a 10% down payment on loans if the loan proceeds are being used to cover a change of ownership. It also requires a 10% down payment from startup businesses, which the SBA defines as any business that has been in operation for a year or less. In all other cases, the SBA does not set a minimum equity injection for 7(a) loans.
However, individual lenders are allowed to enforce their own down payment requirements, as long as the required amount is in line with what is required for similarly sized, non-SBA loans.
While some lenders may only require a down payment of 10%, some may set higher down payment requirements for businesses seen as high risk, such as those with lower credit scores or fewer years in business. Most lenders will not ask for a down payment that exceeds 30% of the loan amount.
The down payment an SBA loan requires ultimately depends on the lender. Here’s a look at the down payment requirements enforced by the top five SBA 7(a) lenders in fiscal year 2025:
| Lender | SBA 7(a) down payment requirement | Average loan size |
|---|---|---|
| Northeast Bank | As low as 10% | $167,557 |
| Huntington National Bank | As low as 10% | $298,071 |
| Newtek Bank | Not disclosed | $420,445 |
| U.S. Bank | Not disclosed | $252,313 |
| TD Bank | As low as 10% | $144,637 |
Keep in mind that most lenders advertise their minimum down payment requirements, which may only apply to the most qualified of borrowers. Businesses that are seen as a higher risk, such as those with lower credit scores or less time in business, may be required to put down more.
To learn more about the specific down payment that might be required for your business, you’ll likely need to contact lenders directly. In some cases, the best thing you can do is apply with multiple lenders and compare your options.
The popular SBA 7(a) loan can provide up to $5,000,000 to be used for inventory, working capital, machinery, commercial real estate and more.
The maximum interest rate on a 7(a) loan is based on the prime rate (currently 6.75%) or an optional lower peg rate, plus 6.5%. Repayment terms range from 120 to 300 months, depending on how you use the funds. For example, SBA working capital loans must be repaid within ten years, whereas you could take up to 25 years to repay a commercial real estate loan.
The SBA uses the FICO Small Business Scoring Service (SBSS) to assess SBA 7(a) loan applications. This score is based on multiple factors, including your credit history and business financials.
The minimum SBSS score for loans up to $350,000 is 165 as of January 2026. However, beginning in March, the SBA is changing the underwriting requirements for 7(a) small loans, allowing lenders to use their own credit models to determine which businesses are creditworthy. That said, approval for larger loan amounts may still be based on your SBSS score, among other factors.
SBA 504/CDC loan down payments
Business owners should expect to pay a minimum down payment of 10% for an SBA 504/CDC loan, with some businesses needing to provide up to 20%.
The 504 down payment requirements are a little different. You can contribute cash, property or land — though if you contribute property or land, it may need to be approved by the SBA, purchased with cash and/or be part of the property you’re developing.
Because the rules get more complicated here, you’ll want to talk with your lender about the requirements if you plan to use anything besides cash as a down payment.
- All businesses need to contribute at least 10% as a down payment.
- If your business is less than two years old, you’ll need to contribute 15%.
- If your business is a limited or special purpose property, you’ll need to contribute 15%. If you’re not sure if you fall into this category, talk with your lender.
- If your business is a limited or special purpose property AND is less than two years old, you’ll need to contribute 20%.
The SBA defines a limited or special purpose property as a business “with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built.”
There are a lot of business types that are considered limited or special purpose. Gas stations, bowling alleys, farms and wineries are just a few examples.
If you aren’t sure if your business fits that definition, talk with a lender ahead of time to find out what down payment requirements you’ll need to meet.
Loan amounts for SBA 504 loans can go as high as $5,500,000, allowing you to finance major fixed assets, such as equipment and commercial real estate. Repayment terms go up to 120 months for equipment financing or 300 months for commercial real estate loans.
Along with your 10% down payment, 40% of the loan amount is typically funded by a Certified Development Company (CDC) and 50% from a third-party lender.
SBA 504/CDC loans must follow specific SBA loan requirements, such as business owners needing to create or retain a job per $65,000 borrowed (or $100,000 for small manufacturers) and meet the SBA size guidelines. Your business’s cash flow will likely play a significant role during the underwriting process.
SBA CAPLine down payments
Your down payment for most CAPLine financing can be anywhere from 0% to 30% or higher, depending on the lender you choose.
CAPLines fall under the SBA 7(a) loan umbrella, so there generally isn’t a down payment requirement set by the SBA. The only exception to this rule is for startups in business for a year or less, as these businesses will need to contribute a minimum down payment of at least 10%.
As with other types of 7(a) loans, individual lenders can require a down payment in line with what they’d charge for non-SBA loans. This often falls in the 10% to 20% range, though some lenders could charge 30% or higher. Your credit score, time in business, collateral and the lender you choose may affect what down payment is required.
With an SBA line of credit, you can draw up to your set limit, repay the debt and draw again as often as needed. Credit limits go up to $5,000,000, with repayment terms capping at 60 to 120 months, depending on the type of CAPLine. All SBA CAPLines come with capped interest rates, which currently max out at 13.25%.
There are four types of CAPLines available:
- Seasonal CAPLine: Can help with seasonal fluctuations in revenue, such as covering payroll or inventory costs.
- Contract CAPLine: Ideal for contract-related expenses, such as overhead or administrative expenses.
- Builders CAPLine: Can help finance general contractors or rehabilitate property for resale.
- Working CAPLine: Similar to a working capital line of credit, you can use funds for short-term and unexpected expenses, as well as covering recurring debts.
How to get a down payment for an SBA loan
Lenders may require a down payment for a small business loan because they want the business owner to have “skin in the game.” There are several ways you can get a down payment — but some methods, like using your personal or retirement savings, come with considerable risk.
Rely on personal savings
If you have enough cash reserves, you can use your personal savings to cover the down payment.
Look for angel investors
In some cases, asking an investor to cover the down payment can work. Angel investors are typically high-net-worth individuals who can help provide startup financing. Instead of fronting the entire loan amount, you can negotiate for the angel investor to cover only the down payment. In return, some angel investors may negotiate to own a percentage of your company.
Trim expenses
If your business is already operating, you can review your business budget for ways to cut costs. Working with independent contractors, for example, can be a less costly alternative to a full-time employee who is paid salary plus benefits.
You can also scale back on variable costs, such as using Zoom for meetings to save on time, travel and transportation costs.
Use your 401(k) savings or Rollover as Business Startup Plan
Owners of C-corps can turn to their retirement savings plans to cover a loan down payment. A rollover as a business startup (ROBS) plan allows you to invest the funds in your retirement account, such as your 401(k) or traditional individual retirement account (IRA).
Under a ROBS plan, you are not withdrawing from your retirement funds — instead, the funds are rolled into another account, which buys shares in your corporation. For this reason, a ROBS plan is available only to C corporations since this business structure enables a company to sell stock.
While a ROBS can provide access to the funds needed for a down payment, some drawbacks are worth noting. Depending on the down payment you need, you could risk investing a significant portion of your retirement savings. If your business fails, you might lose your future retirement security. Also, setting up, administering and maintaining your ROBS could come with additional fees, which could end up making this a costly option.
SBA loans with no down payment
The following SBA loan programs typically don’t require a down payment or collateral. While an unsecured business loan could be ideal for business owners lacking financial resources, lenders may place more weight on other requirements for an SBA loan, such as a sound business plan and strong financial statements.
SBA microloans
As the name suggests, SBA microloans offer small loans up to $50,000 with no down payment required. Similar to the 7(a) loan, you can use microloans for general financing, including working capital, inventory, furniture and equipment. The maximum term is 84 months. Interest rates are negotiable between the business owner and intermediary, typically ranging from 8.00% to 13.00%.
Some microlenders don’t enforce a minimum credit score, making this loan program ideal for business owners with little to no credit history. Business owners should have a robust business plan with cash flow projections over the next 12 months before submitting a loan application.
SBA disaster loans
The SBA extends financing to small businesses affected by declared disasters through SBA disaster loans. Business owners within declared disaster areas may qualify for the SBA Economic Injury Disaster Loan (EIDL) if their companies have suffered a significant economic injury. Declared disaster areas are affected by natural disasters, such as hurricanes and wildfires. EIDLs offer up to $2,000,000 in funds with an interest rate capped at 4.00% and repayment terms up to 360 months. Eligible expenses include working capital, rent and health care benefits.
Businesses in declared disaster areas can also apply for a physical damage loan up to $2,000,000 to help repair or replace damaged property. The SBA enforces a maximum interest rate of 4.00% to 8.00%, depending on whether you can obtain help without SBA assistance. Some business owners may qualify for mitigation assistance financing on disaster-prevention projects — installing hurricane roof straps or storm shelters, for instance.
Note that the EIDL program may require collateral for loans over $50,000.
SBA Express Loans, in some cases
While most SBA loans can take several months to process and fund, the SBA Express Loan offers an accelerated turnaround of approximately 36 hours. If approved, you can borrow up to $500,000 as a term loan or line of credit to use toward a range of business expenses. Terms go up to 120 months for working capital and business acquisitions or 25 years for commercial real estate.
The maximum interest rate for SBA Express Loans is in line with other 7(a) loans. You typically don’t need to provide collateral or a down payment for SBA Express Loans below $50,000, though this can depend on the lender you choose. And some lenders may offer Express Loans without a down payment, though it’s not guaranteed. The SBA doesn’t have a minimum equity injection requirement, but does require lenders to treat these like they would similarly sized non-SBA loans.
Frequently asked questions
Yes, though minimum down payment requirements vary depending on the lender, the SBA loan type and the financial situation of the applying business. For example, although a 10% down payment is common, some lenders may require higher equity injections (up to 30% of the loan amount) for companies with weak cash flow or low-value collateral.
The SBA requires no minimum down payment on 7(a) loans of $350,000 or less. For loans over $350,000, a minimum down payment of 10% will only be required if the business is a startup or the loan is being used for a change of ownership.
That said, SBA lenders are allowed to set their own down payment requirements, so be sure to compare your options when applying for an SBA 7(a) loan.
Yes, some SBA loan programs, such as the SBA microloan or SBA disaster loan program, don’t require a down payment. Keep in mind that lenders who don’t require a down payment will likely place more weight on your business plan, financial statements and other eligibility criteria.
Alternatively, you can consider a startup business loan with no money to help get your business up and running.
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