SBA lenders approved 589 7(a) loans to advertising agencies between October 2023 and June 2026, about $288 million from 119 lenders. The median loan was $200,000, above the national $150,300, at a median rate of 10.5% against 10.25% nationally. Start-ups were just 4.2% of loans. Acquisitions were 10.9%, close to the national 10.4%, at a median of $815,000. Because an agency has little hard collateral, lenders decide on net revenue after pass-through media costs, how concentrated the client list is, and whether clients are tied to the business or to its founder.
| Measure | Advertising Agencies | All industries |
|---|---|---|
| SBA 7(a) loans approved | 589 | 162,355 |
| Median loan | $200,000 | $150,300 |
| Middle half of loans | $84,000 – $497,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 13.4% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.5% – 11.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 64 (10.9%) | 16,849 (10.4%) |
| Median acquisition loan | $815,000 | $693,000 |
| Lenders that made these loans | 119 | 1,648 |
| SBA 504 loans (real estate, equipment) | 34 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 589 (Oct 2023 – Jun 2026)
- Median loan
- $200,000 (national $150,300)
- Median rate at approval
- 10.5% (national 10.25%)
- Acquisitions
- 64 loans (10.9%), median $815,000
- Start-ups
- 4.2% of loans
- Loans of $1 million or more
- 79 (13.4%)
An asset-light borrower that borrows above the median
Advertising agencies (NAICS 541810) create campaigns and buy media for clients: creative, strategy, media planning and placement, and increasingly digital and social work. From FY2024 through June 2026, 119 lenders approved 589 SBA 7(a) loans to them, worth $288,039,500, with a median of 4 jobs supported per loan.
| Figure | Advertising agencies | What it says |
|---|---|---|
| Median loan | $200,000 | Above the national $150,300, with little collateral behind it |
| Middle half of loans | $84,000 to $497,000 | Working capital and refinancing at the low end, purchases at the top |
| 90th percentile | $1,380,840 | Well above the median acquisition loan of $815,000 |
| Loans of $1 million or more | 79 (13.4%) | Large loans for a borrower with so few hard assets |
| Median rate | 10.5% (middle half 9.5% to 11.5%) | Slightly above the national 10.25% |
| Fixed-rate share | 10% | Nearly all float |
| Start-ups / franchises | 4.2% / 0.5% | Lenders fund agencies with a record, almost never new ones |
| SBA Express | 35.3% of loans | Larger loans go past the Express limit of $500,000 |
| Acquisitions | 64 loans (10.9%), median $815,000 at 9.5% | About four times the industry's median loan |
| SBA 504 | 34 loans, median $499,000 | Agencies that own their offices |
The contrast between the median loan and the collateral is the point. A conventional bank lends against assets and would find little here: computers, furniture, a lease and receivables. SBA 7(a) lends against cash flow and allows goodwill to be financed over up to 10 years, which is how agencies can borrow more than the typical SBA borrower while owning so little. See financing goodwill.
Gross billings are not revenue
The first thing an underwriter does with an agency's P&L is strip out the money that passes through it. When an agency buys media or outside production for a client, it often bills the client for the full cost and pays the vendor, so gross billings can be many times what the agency actually earns. Lenders size loans on what the agency keeps.
| Line | How a lender treats it |
|---|---|
| Gross billings | A measure of activity, not income; not used to size the loan |
| Media and third-party production passed through | Deducted: the money belongs to publishers, platforms and vendors |
| Agency revenue (fees, commissions, markups) | The real top line, the figure margins are measured against |
| Retainer fees | Valued most, because they recur; lenders read the contract terms behind them |
| Project fees | Counted, but tested for repeatability across years |
| Cash held to pay media vendors | Not the agency's liquidity; offset against media payables |
The last row catches agencies by surprise. Clients often pay the agency before the agency pays the media, so the bank balance at month-end can look strong while most of it is owed to vendors. Lenders read the balance sheet with media payables against that cash, and an agency that has used client media money to fund its own operations shows up quickly. An AP aging with media payables identified helps. See cash versus accrual financials.
Present agency revenue net of pass-through costs before a lender does it for you; a file that leads with gross billings reads as inflated.
Clients, contracts and the people they follow
An agency's cash flow is its client list, and three questions about it decide most loans.
- Concentration. What share of agency revenue comes from the largest client, and the top three? A single client that can move its account decides whether the business can repay. Concentration does not rule out a loan, but it changes how much a lender will lend. See customer concentration in an acquisition.
- Contract terms. Many agency agreements can be ended on short notice, and some are project-by-project with no contract at all. Lenders credit tenure: a client that has renewed year after year is worth more than a new retainer with a long term on paper.
- Who holds the relationship. If clients hired the founder or a particular creative director, the cash flow walks out when that person does. Lenders look for account teams that serve clients without the owner, and may require key person life insurance on the people the business depends on. See key person life insurance.
SBA's cash flow test then applies: at least 1.15x debt service coverage, and 1.0x globally once the owners' personal obligations are counted. Agencies that pay owners through distributions rather than salary should know that SBA loan proceeds cannot fund a distribution to owners, and a lender will look at how much cash the owners take out. See debt service coverage.
Why start-ups are rare and acquisitions are large
Start-ups made up only 4.2% of agency loans. With no collateral and no history, a new agency offers a lender nothing to underwrite except the founder's reputation, and SBA lenders rarely lend on that alone. An agency that has filed a few years of profitable returns is a different borrower.
Acquisitions are the other end. Sixty-four loans, 10.9% of the total, financed a change of ownership at a median of $815,000 and 9.5%. Agency deals have a particular problem with SBA's rules: sellers and buyers in this industry often want an earnout, paying part of the price only if clients stay. SBA prohibits an earnout to the seller in a change of ownership it finances. What replaces it is usually a seller note, and that note must be a fixed obligation: a note whose payments rise or fall with client retention is an earnout by another name. A seller note can count toward up to half of the required 10% equity injection only if it is on full standby, with no principal or interest paid, for the life of the SBA loan; a note that pays is allowed but counts as debt in the coverage test. See earnouts and acquisition debt and earnout vs seller note.
The seller's transition is the other lever. In a complete change of ownership the seller may not stay as an owner, officer or employee but may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026. For an agency whose clients know the seller, that period is how relationships move. From the same date, a change of ownership must show 1.25x coverage on historical results, financial due diligence is required on every one, and a quality of earnings report is required on acquisitions of $3 million or more excluding real estate. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, an independent business valuation is required, which catches most agency purchases because there is so little real estate or equipment to subtract. See financing a marketing agency acquisition.
Working capital: when a line fits better
Agencies often need working capital because clients pay slowly while staff and media must be paid on time. A term loan can fund that, but a revolving line tied to receivables usually matches the need better. Asset-based lenders typically advance 80% to 90% of eligible receivables, treat receivables more than 90 days past invoice as ineligible, and commonly cap any single customer at 20% to 25% of eligible receivables. That last limit matters for agencies: one large client can hold most of the receivables and still count for only a fraction of the borrowing base. See lines of credit for marketing agencies, concentration limits and SBA CAPLines.
Preparing an agency's SBA file
Start with SBA's list: business tax returns for 2–3 years, a P&L, balance sheet and year-to-date P&L, a debt schedule, and personal tax returns and a personal financial statement for each owner of 20% or more, each of whom personally guarantees the loan. For a purchase, add the agency's latest full year of figures and the letter of intent. Then add what an agency lender will ask for:
- A reconciliation from gross billings to agency revenue for each year in the file
- Agency revenue by client for each year, showing tenure and the largest accounts
- Client agreements for the largest accounts, including termination and assignment terms
- An AR aging by client and an AP aging with media payables identified
- A staff list showing who manages each major client, and how long they have been there
- The owner's resume, supporting SBA Form 1919's management experience
Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in. For an agency, the package does the work that gross-billing statements do not: it presents net revenue, client tenure and concentration the way an underwriter will read them. Transparent's book holds 278 lenders that write SBA 7(a) and 504, and on SBA loans the lender pays Transparent, not the borrower.
Common questions
- Can an advertising agency get an SBA loan without collateral?
- Often, though not entirely. SBA 7(a) lends against cash flow and can finance goodwill, which is how the median agency loan, $200,000, sits above the national $150,300 despite agencies having few hard assets. But owners of 20% or more guarantee the loan personally, and the lender takes what collateral is available, which can include equity in an owner's home.
- Do lenders use my gross billings or my net revenue?
- Net revenue. Media and third-party costs passed through to clients are deducted, and the loan is sized on what the agency keeps.
- Can I use an earnout to buy an agency with an SBA loan?
- No. SBA prohibits an earnout to the seller in a change of ownership it finances. A seller note is the usual substitute, and it counts toward the equity injection only on full standby for the life of the loan.
- Can I start an agency with an SBA loan?
- It is uncommon: start-ups were 4.2% of agency loans from October 2023 to June 2026. Lenders favor agencies with filed returns showing profitable years and clients that have stayed.
- How does having one big client affect my loan?
- It limits it. A term lender discounts cash flow that depends on one client, and a receivables line commonly caps any single customer at 20% to 25% of eligible receivables, so a large client's invoices above that cap add nothing to what you can borrow.