SBA loan basics
Short answer
The main difference is that the SBA guarantees a portion of the loan to the bank, reducing the lender's risk. This makes it easier for small businesses to qualify for financing they might not get otherwise.
A regular bank loan (conventional loan) is entirely at the bank's risk. For an SBA 7(a) loan, the SBA provides a guarantee of up to 75-85% of the loan amount to the lender, making them more willing to lend to businesses with less collateral or shorter operating histories.
A startup needs $200,000. A conventional bank loan might require 100% collateral. With an SBA loan, the bank might approve it with less collateral because the SBA will cover a significant portion if the business fails.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
SBA 7(a) Loans Overview
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on sba vs regular loan
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day