SBA loan maximum maturity: 10 years or 25 years by use

The three limits stacked together

Section 120.212 reads like a funnel. First, the term "shall be the shortest appropriate term, depending upon the Borrower's ability to repay." That is the governing idea: the term is not a free choice to maximize, it is the shortest one that the borrower can reasonably repay. Second, ten years or less is the default ceiling. Third, a hard outer wall of 25 years including extensions applies to everything. A loan can be shorter than the ceiling for its category, and often is, but it cannot be longer.

The ten-year default

The ten-year ceiling applies unless the loan "finances or refinances real estate or equipment with a useful life exceeding ten years." Money spent on working capital, inventory, supplies, raw materials, or equipment that wears out in ten years or less falls into the default bucket. If your loan mixes uses, the regulation speaks of what the loan finances; the practical effect is that the term tracks the longest-lived asset being financed, subject to the lender's structure. The regulation does not say how a mixed loan is blended, and your lender and SBA procedures answer that question.

The 25-year exception and who gets it

Real estate, and equipment whose useful life exceeds ten years, can run up to 25 years. The parenthetical in 120.212(c) adds that a portion of a loan used to acquire or improve real property "may have a term of 25 years plus an additional period needed to complete the construction or improvements." So a building under construction can have a longer total schedule than 25 years from closing, because the period of completing the work is added on top. Equipment and leasehold improvements get a smaller allowance: paragraph (b) says the term "may include an additional reasonable period, not to exceed 12 months, when necessary to complete the installation of the equipment and/or complete the leasehold improvements."

Worked examples

Pick "working capital" in the checker: the cap is ten years. Pick equipment with a ten-year or shorter life and enter 6 months for installation: ten years and six months, because the installation allowance reaches up to 12 months. Enter 20 and the tool caps the extra at 12, giving 11 years, as the regulation says "not to exceed 12 months." Pick equipment over ten years: 25 years plus up to 12 months. Pick real estate: 25 years plus the construction or improvement period, which the tool does not try to quantify because the text leaves it to the project. These are ceilings. A lender can offer shorter terms, and the regulation expects the term to match repayment ability.

Does a longer term help you?

A longer term lowers the monthly payment on the same principal and raises total interest paid. This page does not model rates, and 120.212 says nothing about pricing. Our SBA 7(a) loan calculator shows how the payment changes with the term. If you may pay the loan off early, our prepayment fee calculator covers that separately. This page quotes only the maturity rule.

What the rule does not say

It does not set a minimum term, name a typical term, or describe balloon payments or how extensions are counted beyond saying the 25-year cap includes them. It does not define "useful life," so the lender decides how to document that equipment lasts longer than ten years. And it does not say what the shortest appropriate term is for you; that depends on your cash flow.

A planning checklist

Before you ask for a long term, list each thing the loan will pay for and write down how long each will last. Inventory turns over in months. A delivery van may last seven or eight years. A building lasts decades. A restaurant buildout is a leasehold improvement whose usefulness is bounded by the lease. The regulation lets the loan term follow the longest-lived thing the loan finances, but it also requires the shortest appropriate term, so a lender will usually ask why a long term is needed.

Then compare the cost of each choice. The calculator on this page gives the ceiling, and our loan calculator shows what a given term does to the payment. A good question for a lender is: what term are you proposing, and what in my cash flow justifies it? The answer should tie back to the sentence in 120.212(a) that says the term depends on the borrower's ability to repay.

Sources

• 13 CFR § 120.212, What limits are there on loan maturities?. Read November 2, 2026.

Text read: Electronic Code of Federal Regulations, Title 13, Part 120, current through the eCFR issue date of October 29, 2026. Dollar figures and percentages on this page are the ones printed in those sections as of that date; SBA can amend the rule and publishes loan-program procedures (such as SOP 50 10) that add detail this page does not cover. Confirm current terms with an SBA-approved lender or at sba.gov. This page summarizes the regulation and does not replace it.