SBA Loans vs. Traditional Business Loans—What’s the Right Fit for You?

I spent some time this week untangling one of the most common questions I get from business owners:“Should I go for an SBA loan or a traditional business loan?”

The short answer?

It depends on your goals, timeline, and how much paperwork you’re ready to deal with. But here’s the breakdown to help you think it through.

First, Let’s Talk SBA Loans

SBA loans are partially guaranteed by the U.S. Small Business Administration, which reduces risk for lenders. That’s how these loans offer better terms than you’d usually find with a standard bank loan.

But there’s more than one type of SBA loan—let’s take a look at the most common options:

SBA 7(a) Loan

The most common and flexible SBA loan.

• Use it for: Working capital, equipment, business acquisitions, real estate (owner-occupied), and more.

• Terms: Up to 25 years for real estate, up to 10 years for working capital.

• Max Loan Amount: $5 million.

  
  

SBA 504 Loan

Focused on major fixed assets.

• Use it for: Purchasing or renovating commercial real estate, buying equipment.

• Terms: Typically 10–25 years.

• Max Loan Amount: Around $5–6 million.

• Pro tip: Great for long-term investments in your business infrastructure.

  
  

SBA Express Loan

Faster and a bit more streamlined.

• Use it for: Working capital, equipment, or business lines of credit.

• Terms: Up to 10 years.

• Max Loan Amount: $500,000.

• Pro tip: It’s called "Express" for a reason—less paperwork than 7(a), but more than a traditional business loan, and quicker decisions.

  
  

Why Business Owners Like SBA Loans

Pros:

• Lower interest rates

• Longer repayment terms

• Can be used for a wide range of business needs

• Available to many types of businesses with strong fundamentals

  
  

Cons:

• Slower processing time (especially for 7(a) and 504 which can take 3 to 6 months)

• Extensive documentation required

• Usually need good credit and strong financials

• Collateral is often part of the deal, and blanket UCC filing placed on the business (nearly impossible to subordinate for additional funding)

  
  

Now Let’s Talk Traditional Business Loans

These loans are issued directly from banks or lenders, without the SBA guarantee.

Pros:

• Faster approvals (sometimes within a few days)

• Less paperwork (especially for smaller loans)

• More flexibility on loan structure and use

  
  

Cons:

• Higher interest rates

• Shorter terms (typically 1–5 years)

• Lenders take on more risk, so underwriting may be tougher for newer businesses

• Equipment loans will usually only file UCC on collateral, leaving more room for additional lending opportunities.

  
  

So Which One Makes Sense for You?

• If you’re looking to make a comprehensive expansion to your business and have the time and paperwork to spare — an SBA loan, especially 7(a) or 504, could be the right move.

• If you need fast access to funds or need to leave room for additional financing, a traditional loan might make more sense.

• If you're somewhere in between? SBA Express might be your sweet spot.

Need help figuring it out?

Brilliance Funding can help you evaluate your options and choose the right loan type for your goals. We work with both SBA lenders and traditional financing sources — and we’re here to help you get funded with less friction.

📅 Book a free strategy session today.