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SBA stopped using the SBSS score to screen small 7(a) loans on March 1, 2026. It also sets new 7(a) fees each fiscal year. Both changes affect how borrowers weigh SBA loans against other options.

More small firms are also trying online lenders. In the Fed's 2026 report, 29% of financing applicants sought money at online lenders. In the 2020 survey that share was 17%.

Mar. 1, 2026
SBA ended SBSS screening
for 7(a) Small loans
Source: SBA Procedural Notice 5000-875701
29%
Applicants seeking financing at online lenders
(17% in the 2020 survey)
Source: Fed Small Business Credit Survey, 2026 report
5 to 10 days
SBA review time for a standard
7(a) loan (business days)
Source: SBA 7(a) loan program

What the SBA Changed, and When

SBA discontinued the SBSS score for 7(a) Small loans, which are $350,000 or less. The notice was published Jan. 16, 2026. The change took effect March 1, 2026.

Lenders now use their own credit analysis, which may include internal scoring models. SBA Express loans were not affected.

SBA also sets upfront fees by fiscal year. The FY2027 schedule took effect Oct. 1, 2026. The fee is a percentage of the guaranteed portion of the loan.

For loans of $150,000 or less, it is 2%. From $150,001 to $700,000, it is 3%.

Above $700,000, it is 3.5% of the first $1 million guaranteed. It is 3.75% of any guaranteed amount above that.

Illustrative example, not a quote. Take a $500,000 SBA 7(a) loan with a 75% guarantee. The guaranteed portion is $375,000.

At 3%, the upfront fee is $11,250. Borrowers can often finance that fee into the loan. Financed at an assumed 10.00% rate for 10 years, it adds about $149 a month.

That is about $17,840 over the term. The assumed rate is the SBA maximum for loans over $350,000 with Prime at 7.00%.

The Speed Gap

Online lenders can often fund within a few days. Speed varies by lender and by how complete your file is. Online applicants in the Fed survey prioritized speed and odds of funding.

SBA lists 5 to 10 business days to review a standard 7(a) loan. The lender's work comes first, so total time often runs weeks to months. SBA Express loans are capped at $500,000.

Seasonal cash flow gaps or urgent needs can make a multi-week SBA process costly. Many weigh that against SBA's lower rate caps.

Where Borrowers Are Going Instead

Business lines of credit suit recurring working capital needs. Online and revenue-based products can suit needs measured in days. Costs are often higher than bank or SBA pricing.

The Fed survey points the same way. Of applicants who borrowed from online lenders, 60% said actual costs were higher than expected. At small banks that share was 37% and at large banks it was 32%.

Private credit has grown quickly in recent years. Some private credit funds that once focused on larger deals are looking at smaller businesses. How far that reaches small borrowers is still unclear.

Who Still Benefits from SBA 7(a)

Operators buying a business, commercial real estate or long-life equipment often fit the SBA program. SBA allows terms up to 25 years for real estate. Working capital generally runs 10 years or less.

Equipment can run longer when its useful life exceeds 10 years. Non-bank lenders often offer shorter terms.

The guarantee can help early-stage or asset-light firms avoid high rates in the non-bank market. Lender underwriting for SBA loans can allow thinner collateral than some private lenders accept.

$44.8B
SBA 7(a) and 504 guarantees, FY2025
(84,400 loans)
Source: SBA news release 25-83
77,600
SBA 7(a) loans guaranteed, FY2025
(about $37 billion)
Source: SBA news release 25-83

Quick Check

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The Approval Rate Picture

In the Fed's 2026 report, full approval varied by lender type. It ran from 38% at online lenders to 57% at small banks. Shares cover loans, lines and cash advances.

Firm age mattered. Firms 0 to 5 years old were fully approved 48% of the time. Firms 21 or more years old were at 63%.

Size mattered too. Firms under $100,000 in revenue were at 37%. Firms over $10 million were at 76%.

With SBSS screening gone for small 7(a) loans, lenders set their own credit standards. Standards can differ from one lender to the next. Compare lenders and review our rejection data and credit profile tips.

Lender Exits Are Part of the Picture

BayFirst Financial announced on Sept. 29, 2025 that it would exit SBA 7(a) lending. It described a strategic review aimed at reducing the SBA 7(a) balances it held. In December 2025 it sold $94.6 million of SBA 7(a) loans to Banesco USA.

Other lenders may change how active they are in the program. Ask any lender how much SBA lending it does before you apply.

SBA 7(a) vs. Business LOC vs. Revenue-Based Financing
A side-by-side comparison of three structures small business operators often weigh in 2026.
How to use this: Match your priority (speed, cost, term length, or collateral flexibility) to the column that aligns. If two priorities conflict, the "Best For" row is your tie-breaker.
Factor SBA 7(a) Business Line of Credit Revenue-Based Financing
Funding Speed Weeks to months Slower Days to weeks Medium Often days Faster
Rate Capped at 10.00% to 13.50% (Prime 7.00% plus a size-based spread) Varies by lender and credit profile Often higher than bank or SBA pricing (factor rate)
Term Up to 25 years for real estate, generally 10 years or less for working capital Revolving, renewed on lender terms Short term, varies by provider
Credit Standard Set by the lender (SBSS screening ended for 7(a) Small loans on Mar. 1, 2026) Set by the lender Set by the provider
Collateral Required Often required on larger loans Secured or unsecured Varies, repayment tied to revenue
Upfront Fees 2% to 3.75% of the guaranteed portion (FY2027) Varies by lender Varies by provider
Personal Guarantee Typically required from owners of 20% or more Common but negotiable Varies
Best For Acquisitions, real estate, long-horizon capex Revolving working capital, payroll gaps, inventory Revenue-generating businesses needing capital in days

What Operators Should Watch Next

SBA publishes its 7(a) fee schedule each fall for the new fiscal year. The FY2027 schedule took effect Oct. 1, 2026. Some small loans to manufacturers, food supply chain and rural firms carry no fee.

Variable-rate borrowers should also watch Prime. The Fed raised its target range to 3.75% to 4.00% on Sept. 17, 2026. Prime moved from 6.75% to 7.00% that day.

Illustrative example, not a quote. On a $750,000 variable balance, a 0.25-point rise adds about $1,875 a year in interest.

The next Fed decision is scheduled for late October 2026. Some borrowers compare a fixed-rate term structure for that reason.

▶ Next Move

Check the SBA fee schedule and your lender's credit standards before you apply

SBA posts its fee notice each fall. Read the FY2027 notice on SBA.gov and ask your lender whether a fee exemption applies. Since SBA ended SBSS screening, also ask what credit standard the lender uses.

A targeted credit improvement effort can help while you compare lenders.

Sources

Figures labeled as illustrations are examples, not market data. Rates change often. Confirm current terms with a lender.

Last reviewed: October 24, 2026