Your Guide to SBA Loan Repayment Terms and How to Submit a Payment
The U.S. Small Business Administration (SBA) offers small business loans to borrowers who are unable to get approved for traditional financing. These loans give business owners the funds they need for growth, along with more favorable repayment terms.
In this guide, we’ll give a full rundown of the repayment terms — including maturities, interest rates, collateral, and late fees — for SBA 7(a), SBA 504, and Microloans. Plus, we’ll answer these commonly asked questions:
How Do You Make SBA Loan Payments?
Can You Repay Other Loans With SBA Loan Funds?
How Can I Manage My SBA Loan Repayment If I'm Facing Financial Difficulties?
Can I Pay Off My SBA Loan Early Without a Penalty?
What Happens If I Default on an SBA Loan?
How Does SBA Loan Repayment Work?
SBA loan repayment works like a typical term loan. You repay the loan in monthly installments, which cover a portion of the principal, interest, and any fees. You continue to make these payments until the loan’s maturity date (when the full loan amount is paid off). If you have a loan with a fixed rate, your payment will be the same each month, but if you have a variable interest rate, your monthly payments can fluctuate.
Your SBA lender or Certified Development Company (CDC) will provide you with the complete repayment terms for your loan. However, let’s take a closer look at the possible maturities, interest rates, collateral, and late fees for three types of loans: SBA 7(a) loans, SBA 504 loans, and Microloans.
SBA 7(a) Repayment Terms
The maximum loan amount for an SBA 7(a) loan is $5 million, and based on changes effective June 1, 2025, collateral is required for any loan over $50,000.
The available maturities (or loan term lengths) are:
Up to 10 years for working capital and inventory loans
Up to 25 years for real estate loans
Each month, the SBA publishes the maximum allowable fixed interest rates on the FTA Wiki. For October 2025, the rates are:
Loans for $25,000 or less: 15.25%
Loans for $25,001-$50,000: 14.25%
Loans for $50,001-$250,000: 13.25%
Loans greater than $250,000: 12.25%
For variable interest rates, the maximum allowable amount is:
Loans for $50,000 or less: Base rate + 6.50%
Loans for $50,001-$250,000: Base rate + 6.00%
Loans for $250,001 to $350,000: Base rate + 4.50%
Loans greater than $350,000: Base rate + 3.0%
If a borrower is more than 10 days late making a loan payment, the lender can charge a late payment fee of up to 5%.
SBA 504 Repayment Terms
The maximum loan amount for an SBA 504 loan is $5.5 million, and the assets being financed serve as the collateral.
The available maturities are:
10 years
20 years
25 years
The loan term length you receive will be based on the “useful life of the property being financed,” according to the SBA’s SOP 50 10 version 8.
The interest rate for an SBA 504 loan is fixed and based on market conditions. Typically, the 5-year Treasury Rate is used as the benchmark for 10-year loans, and the 10-year Treasury Rate is used as the benchmark for 20- and 25-year loans.
A borrower may incur a late fee if a loan payment is received after the 15th of the month. The fee will be either 5% of the payment amount or $100, whichever is greater.
SBA Microloan Repayment Terms
The SBA Microloan program is available to small businesses and select non-profits. The maximum loan amount is $50,000. Whether you need collateral or a personal guarantee for a Microloan depends on the eligibility requirements of the individual lender.
The maximum loan term allowed by the SBA is seven years. Interest rates are set by the lender, but in general, they are between 8% and 13%.
Late fee policies are also at the discretion of the lender.
How Do You Make SBA Loan Payments?
As of October 1, 2025, SBA loan payments can no longer be made by mail. Payments are only accepted online or by phone.
To make online payments for guaranty-purchased SBA-serviced 7(a) loans and debenture-purchased 504 loans, borrowers should use the new MySBA Loan Portal.
If you already have a Capital Access Financial System (CAFS) or Veteran Small Business Certification (VetCert) account, you can use the same login for the new portal. Otherwise, you’ll need to register for MySBA.
One-time online payments can be made with a bank account, debit card, or PayPal. Recurring payments can be set up with a bank account or a debit card.
For other 7(a) loans, you can use Pay.gov, and for active 504 loans, you can use the Central Servicing Agent.
Can You Repay Other Loans With SBA Loan Funds?
Whether you can use SBA loan funds to repay other debt depends on your loan program and the type of debt you have.
SBA 7(a) loans can be used to refinance business debt, and SBA 504 loans can be used to refinance qualified debt. Microloans cannot be used for refinancing.
Also, you can no longer refinance merchant cash advances or factoring agreements based on the 2025 changes to the SBA standard operating procedures. This update means borrowers can no longer use merchant cash advances or invoice factoring as bridge financing while waiting for SBA loan funds.
If you’re looking for a bridge lending solution, try flexible financing options like a business line of credit or a short-term loan instead. Both provide fast applications* and speedy approvals,** so you can get funding quickly to tide you over while you go through the longer SBA application and approval process.
Frequently Asked Questions
Here are the answers to other frequently asked questions about SBA loan repayment.
How Can I Manage My SBA Loan Repayment If I'm Facing Financial Difficulties?
When you apply for an SBA loan, the lender is required to assess whether you’ll be able to reasonably repay from the cash flow of your business. However, neither you nor your lender can predict the future, and you may find yourself in a financially difficult situation from accounts receivable delays.
By partnering with a financing provider, such as BackdPayments, you can offer customers net terms and buy now, pay later. Both options give customers extended payment terms but let you get paid upfront for the invoice. It will keep your accounts receivable humming along so you have the cash on hand to make your SBA loan payments.
Can I Pay Off My SBA Loan Early Without a Penalty?
Both SBA 7(a) and SBA 504 loans can incur prepayment penalties if they’re voluntarily paid early.
For an SBA (7a) loan with a maturity of 15 years or longer, a Subsidy Recoupment Fee will be charged if 25% or more of the loan is paid back in any one year during the first three years. The fee is equal to:
5% of the prepaid amount in the first year
3% of the prepaid amount in the second year
1% of the prepaid amount in the third year
For an SBA 504, loans with 10-year maturities will incur a penalty on any prepayments made in the first five years, and those with 20- or 25-year maturities will incur a penalty on any prepayments made in the first 10 years. The amount of the fee is based on the loan debenture rate and is reduced by 10% each year.
What Happens If I Default on an SBA Loan?
If you default on an SBA loan, you risk losing your collateral and personal assets. If you receive a demand letter from the lender and are unable to pay off the loan balance, it’s recommended you get help from a lawyer to negotiate a settlement.
Choose the Right Funding Options
SBA loans are great options for many small businesses, but you may be looking for a flexible alternative or supplemental funding. Backd offers short-term financing and a buy now, pay later service to help you cover working capital, bridge your cash flow until your SBA funds come through, or streamline your accounts receivable.
You can choose from the following options:
Business Term Loan: Get up to $1.5 million and term lengths of up to 24 months.***
Business Line of Credit: Access revolving credit of up to $1 million when you need it.
BackdPayments: Offer net terms and buy now, pay later to your customers without the risk.
Apply now to get started.
* Your application, including the amount, cost, and approval, is subject to review and is not guaranteed. Terms and conditions subject to change without prior disclosure or notice.
** Decisions and funding may take additional time and not be same-day. Additional information may be required. Time to receive funds varies based upon your financial institution's receiving schedule and operating hours.
*** Loans are decisioned and funded by one of Backd's lender partner banks.
