10 SBA Loan Myths

SBA loans are surrounded by rumors. Some scare good businesses away; others set false hopes. Here are ten myths and the facts.

1. “The SBA gives you the money.”
Almost never. A bank or other approved lender makes the loan. The SBA guarantees part of it. See what an SBA loan is.

2. “SBA loans are free money or grants.”
They are loans. You repay every dollar with interest. Real grants exist but are rare and competitive. Read the truth about small business grants.

3. “You need perfect credit.”
No. Many lenders look for around 650–680, and some go lower with strong cash flow. See what credit score you need.

4. “Startups can’t get SBA loans.”
They can, but they need a strong plan, relevant experience and their own money in the deal. Read can a startup get an SBA loan.

5. “You need a lot of collateral.”
Lenders take the collateral available, but a lack of collateral alone should not be the only reason for a denial on a 7(a) loan.

6. “It takes a year.”
Most loans take weeks to a few months. Preparation is the biggest factor. See how long an SBA loan takes.

7. “Any bank can do it.”
Many banks make few or no SBA loans. Use our lender finder to find the active ones.

8. “Green card holders qualify like citizens.”
Not anymore. Since March 2026, all owners must be U.S. citizens or nationals for 7(a) and 504 loans. See options for green card holders.

9. “Puerto Ricans can’t get SBA loans.”
False. People born in Puerto Rico are U.S. citizens, and businesses in Puerto Rico are eligible. Read Puerto Ricans and SBA loans.

10. “You need a broker.”
You don’t. Lenders must tell you in writing that an agent is not required. Free help is available from SBDCs and SCORE. See free help in Spanish.

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Frequently asked questions

Are SBA loans grants?

No. SBA loans are loans that you repay with interest. The SBA rarely gives grants to ordinary small businesses.

Do I need perfect credit for an SBA loan?

No. Many lenders look for around 650–680, and strong cash flow and experience can offset a lower score.

Can businesses in Puerto Rico get SBA loans?

Yes. Puerto Rico is a U.S. territory, people born there are U.S. citizens, and island businesses can use all main SBA programs.