Analysis of 357,866 SBA 7(a) loans from 2020-2025 using official FOIA data
How you use your SBA loan dramatically affects your odds of success. We analyzed every SBA 7(a) loan from 2020 to 2025 and found that business acquisitions have the lowest default rate of any loan purpose — nearly 3x lower than new business loans.
Default Rate by Business Type
| Business Type | Default Rate | Total Loans | Defaults | Volume |
|---|---|---|---|---|
| New Business or 2 years or less | 1.99% | 59,584 | 1,184 | $26.4B |
| Startup, Loan Funds will Open Business | 1.43% | 57,928 | 828 | $30.4B |
| Existing or more than 2 years old | 1.20% | 198,975 | 2,378 | $86.5B |
| Change of Ownership | 0.71% | 36,928 | 262 | $41.3B |
The data is clear: buying an existing business (Change of Ownership) is the safest use of an SBA loan at just 0.71% default rate. New businesses (1.99%) and startups (1.43%) carry significantly more risk. This is why experienced SBA brokers often recommend acquisition financing over startup loans.
Why Business Acquisitions Default Less
- Proven cash flow — You’re buying a business with existing revenue, not hoping customers will show up
- Historical financials — Lenders can underwrite based on 3+ years of tax returns, not projections
- Existing infrastructure — Staff, systems, customer relationships, and vendor accounts are already in place
- Seller involvement — Many deals include seller training periods and non-competes
- Better lender scrutiny — Acquisition deals get more thorough underwriting, filtering out bad deals early
Default Rate by SBA Loan Program
| Program | Default Rate | Total Loans | Defaults | Volume |
|---|---|---|---|---|
| Guaranty | 0.81% | 216,084 | 1,755 | $166.4B |
| FA$TRK (Small Loan Express) | 2.14% | 135,969 | 2,910 | $14.1B |
| Community Advantage Initiative | 6.55% | 2,686 | 176 | $423.2M |
| Standard Asset Based | 0.19% | 1,058 | 2 | $1.1B |
| International Trade – Sec, 7(a) (16) | 1.05% | 952 | 10 | $2.0B |
| Revolving Line of Credit Exports – Sec. 7(a) (14) | 0.59% | 673 | 4 | $1.3B |
| Contract Guaranty | 0.94% | 213 | 2 | $254.1M |
| Small General Contractors – Sec. 7(a) (9) | 0.83% | 121 | 1 | $215.8M |
| Seasonal Line of Credit | 0.00% | 110 | 0 | $100.4M |
SBA Express (FA$TRK) loans default at 2.14% — nearly 3x the rate of standard Guaranty loans (0.81%). The streamlined approval process means less vetting, which shows up in the default numbers. Community Advantage loans default at 6.55% — the highest of any program.
What This Means for You
- Buying a business? You’re in the safest category. Lenders know this and will give you better terms.
- Starting from scratch? Expect more scrutiny and potentially higher rates. A strong business plan is critical.
- SBA Express vs. Standard? Express is faster but carries more risk. Standard 7(a) has better long-term outcomes.
- Working with a broker? A good broker helps you structure the deal to minimize risk — which gets you better rates.
Buying a Business? You’re Already in the Safest Category.
GoSBA specializes in SBA acquisition financing. We provide free business plans, financial projections, and access to 50+ competing lenders.
Data source: U.S. Small Business Administration FOIA 7(a) loan data, FY2020–FY2025.
