SBA Loans in Virginia: 7(a), 504 and Microloans, Lenders and How to Apply
The Small Business Administration (SBA) does not lend to most businesses directly. It guarantees part of loans that approved lenders make to small businesses. That means you apply to a bank, credit union, Certified Development Company or nonprofit lender, and the SBA backs that lender if the loan goes bad. The three main programs, 7(a), 504 and Microloans, differ in how much they lend, what the money can pay for, and who actually makes the loan. Pick the program that matches your use of funds first, then choose the lender.
This article is informational, not legal or tax advice. Loan structure, personal guarantees and the tax treatment of borrowed funds depend on your facts, so talk with a qualified attorney and CPA before you sign anything.
How SBA Loans Work in Practice
An SBA loan is a commercial loan with an SBA guarantee behind part of it. The lender underwrites your application under its own credit standards, collects the paperwork and requests the guarantee. The SBA sets the program rules and maximum amounts, but the lender decides whether to make the loan. Two Virginia businesses with the same profile can get different answers from two lenders for that reason.
The Three Programs Compared
The figures below come from sba.gov. Program limits change, so confirm current maximums there before you plan around them.
| Program | Maximum loan | Typical uses | Who makes the loan | Key limits |
|---|---|---|---|---|
| 7(a) | $5 million | Working capital, equipment, furniture, fixtures and supplies, buying or improving real estate, refinancing business debt, changes of ownership | A participating SBA lender, with the SBA guaranteeing part of the loan | Applied for directly with a participating lender |
| 504 | $5.5 million | Long-term fixed-rate financing for major fixed assets such as land, buildings and long-lived equipment | A Certified Development Company (CDC) working with a senior lender | Terms of 10, 20 or 25 years; cannot fund working capital, inventory or speculation |
| Microloan | Up to $50,000 (average about $13,000) | Working capital, inventory, supplies, furniture, fixtures, machinery and equipment | Nonprofit intermediary lenders | Maximum term of seven years; cannot pay existing debt or buy real estate |
| SBA Express | Up to a smaller maximum, check sba.gov | Working capital and other 7(a) style uses (verify on sba.gov) | Participating SBA lenders | Confirm the current maximum on sba.gov |
7(a): The Core SBA Program
The 7(a) program is the SBA's primary business loan program, and it is the one most Virginia owners mean when they say SBA loan. Its $5 million maximum covers the widest range of uses, from working capital to buying a building. If you are buying an existing business, a changes of ownership loan is usually where a 7(a) application starts. To find a participating lender, SBA Lender Match and your local SBA district office can help.
7(a) Eligibility Requirements
To qualify for a 7(a) loan, your business generally must:
- Be an operating, for-profit business located in the United States
- Be small under SBA size standards
- Not be an ineligible business type under SBA rules
- Be unable to get credit on reasonable terms from other sources
- Be creditworthy, with a reasonable ability to repay the loan
The test for credit from other sources catches many applicants by surprise. Keep records of any conventional loan you were declined for, and of the terms you were offered, so you can answer the lender directly.
Documents to Prepare
Each lender sets its own document list, so ask for it in writing before you start. Common items include:
- Formation documents, such as Articles of Organization or Articles of Incorporation filed with the SCC
- Your Employer Identification Number (EIN) confirmation from the IRS
- Business and personal tax returns
- Financial statements, including a profit and loss statement and a balance sheet
- A debt schedule listing each current business loan and its balance
- Government-issued photo ID for each owner
Virginia Steps to Take Before You Apply
Check your entity status. Search your business in the State Corporation Commission's business entity search at https://cis.scc.virginia.gov/. A Virginia LLC that has been canceled for missed filings cannot easily borrow, and lenders typically verify status during underwriting. The SCC's business information page is at https://www.scc.virginia.gov/businesses/.
Keep your annual registration current. Virginia LLCs file no annual report. Instead, they pay a $50 annual registration fee to the SCC. The fee is due the last day of the 12th month after the month the LLC was organized, and every year after that. The SCC assesses the fee about two months ahead. A late payment adds a $25 penalty, and the LLC is canceled at the end of the third month after the due date. Corporations follow a different schedule: an annual report plus an annual registration fee based on authorized shares (check the SCC annual fee schedule).
Confirm local licenses. Virginia has no general statewide business license, and the SCC issues none. The local Business, Professional and Occupational License (BPOL) tax under Va. Code 58.1-3700 et seq. is administered by cities and counties, usually through the Commissioner of the Revenue. Not every locality levies a general license, and localities set their own rates and filing deadlines. Confirm your obligations with your city or county. Regulated trades also need state board licenses, such as those from DPOR for contractors. Lenders may ask for proof of required licenses, so have those answers ready.
Reserve or file your name. A name can be reserved for $10 for 120 days while you prepare. If you operate under a different name, an assumed name (DBA) is filed with the SCC for $10, not with the circuit court.
State Resources That Sit Beside SBA Loans
- Virginia Small Business Financing Authority (VSBFA): runs the Classic Loan Guaranty Program and a Microloan program that sit beside SBA loans. Confirm current terms with VSBFA before you rely on them. The state grants and funding guide on this site covers the wider state picture.
- Virginia Small Business Development Center (SBDC) network: free advising on loan applications and business plans at https://www.virginiasbdc.org/.
- SBA district office: check the SBA Virginia District Office for current help (verify). The SBA's Richmond district page is at https://www.sba.gov/district/richmond, and you should confirm which district covers your city or county.
Choosing a Lender
Lenders fall into a few groups, and each has different strengths:
- National banks, which may have dedicated SBA lending teams but often focus on larger loans
- Regional and community banks, which may know your local market well
- Credit unions, which may have membership requirements
- Certified Development Companies, which handle the 504 program alongside a senior lender
- Online lenders, which may move quickly but whose fee structures vary widely
Put the same questions to every candidate, and get the answers in writing:
- Is the lender an SBA Preferred Lender?
- How many SBA loans does it make, and in which programs?
- What is its typical loan size for your program?
- What fees will you pay, including SBA guaranty fees and lender closing costs, and which are due at closing?
- What is its timeline from application to funding?
Treat speed claims in marketing as something to verify, not as a promise. The SBA does not set a single approval time for every loan, so the written timeline from each lender is the number that matters.
How to Apply, Step by Step
- Match the program to the use of funds. Long-lived real estate and major fixed assets point toward 504 or 7(a). Inventory, supplies and smaller equipment purchases can fit a Microloan.
- Confirm your entity and license status with the SCC and with your city or county.
- Build your package using the document list from your lender.
- Get free advice from your local SBDC or SBA office before you submit, especially for a first loan.
- Submit to one or more lenders, then compare their written terms, fees and timelines side by side.
- Review the loan agreement with your attorney and CPA, including any personal guarantee and collateral requirements.
SBA guaranty fees apply to guaranteed loans, and the amounts change over time. Confirm current fees on sba.gov (verify on sba.gov) and ask your lender to show every fee in its quote.
Common Mistakes to Avoid
- Applying for the wrong program, such as asking for a Microloan to buy a building
- Letting your SCC registration lapse before you apply
- Submitting incomplete financial statements, which slows underwriting
- Accepting a lender's speed claim without a written timeline
Next Steps
Start by matching a program to your use of funds, then verify your SCC status and local licenses. Gather your financial records, and make a short list of lenders. Ask each one the same questions and compare the answers in writing. This guide is not a substitute for advice from a qualified attorney or CPA, especially for loans that involve personal guarantees, collateral or the purchase of an existing business.