Grants and Direct Loans were directly made and funded by the SBA to the applicant with no bank involvement. These loans were popular in the early stages of the agency, but funding for direct loans has been discontinued due to unsuccessful results of the program. Direct loans are still made under special circumstances, such as natural disasters, but are no longer available for routine business purposes.

Today's SBA 7A Loan Program are loans made by private lenders such as banks, thrifts, savings and loans, etc., and are guaranteed by the SBA with funds appropriated by Congress. Annually the SBA guarantees over $10 billion through these types of loans.

Loans of $150,000 or less usually carry an 85% guarantee, while loans of greater than $150,000 usually feature a 75% guarantee up to a maximum amount of $1,000,000. Therefore, if a lender decides to make an SBA loan for the maximum allowable amount of $2,000,000, the SBA will guarantee only $1,000,000 of that loan, or 50%. That means that the lender is assuming a larger risk.