Qualifying For An SBA Loan: What Small Businesses Need To Know

Small Business Administration (SBA) loans come with a number of benefits, such as lower interest rates, longer repayment terms, and smaller down payments. You can use SBA money to refinance debt or tackle new growth opportunities.

That said, qualifying for an SBA loan isn’t as easy as it may seem. Requirements are rigid, and there is little flexibility or room for errors.

If you’re wondering whether SBA loans are a possibility for your business, you’ve come to the right place. We’ll go over everything you’ll need to know about qualifying for an SBA loan as well as other solid financing options.

Types of SBA Loans You Can Qualify for

There are multiple different types of SBA loans, each one serving a different purpose. These include the SBA 7(a), 504, microloans, and disaster loans, among others.

• SBA 504 – Used for commercial real estate financing loans. They can be used to buy or build new facilities, equipment, and more. They can’t be used for purchasing inventory, consolidating debt, or investing in rental properties.
• Microloans – Can provide funding up to $50,000. They are reserved for small businesses and certain non-profits looking to expand.
• Disaster Loans – Another type of SBA loan that’s only available to small businesses affected by a declared disaster.
• SBA 7(a) Loans – Feature a maximum loan amount of $5 million, which may be used for a wide range of business expenses. There are multiple types of 7(a) loans, including SBA Express, Veterans Advantage, CAPLines, and more.

Each SBA loan type features slight variations when it comes to structure, terms, and qualifications. In some cases, there’s room to negotiate the interest rate and other terms with your lender.

How Do You Qualify for an SBA Loan: The Basics

It doesn’t matter if you’re looking into a Standard 7(a) loan or an SBA Express loan, the underlying qualifications for any type of SBA funding are largely similar. The most basic requirements include:

• Meet SBA’s size standards for what constitutes a small business. This is based on the number of your employees and your total annual income or annual receipts. You can read more about SBA size standards here.
• For-profit business
• Must be located and operate within the United States
• Have invested equity
• Demonstrable need for financing
• Zero outstanding debt to the U.S. government
• Owners aren’t on parole

Qualifying for an SBA Loan (With Collateral)

In some cases, lenders may ask you to put up collateral for your SBA loan. Collateral is any asset with significant value and can include inventory, equipment, real estate, invoices, and more.

Collateral gives lenders additional security and peace of mind. In case you can’t repay your loan, the lender has the right to seize your asset.

Unfortunately, collateral loans can put borrowers at a disadvantage. You’ll have to forfeit the asset you’ve used as collateral if you’re unable to make payments.

How to Apply for an SBA Loan

You’ll have to apply with an SBA-sponsored lender to access this type of financing. The SBA’s website has a “Lender Match” tool that can help you find one in your area.

However, the SBA application process is notoriously challenging. On top of meeting rigid eligibility requirements, you’ll need to ensure everything on your application is 100% accurate, with no errors whatsoever. If the underwriter notices an error, no matter how minor, they’ll deny the application, which puts you back at square one after waiting months.

At National Business Capital, we offer a simpler SBA loan application process. Instead of staying on top of your application individually, our Business Finance Advisors will advocate on behalf of your business to ensure everything moves smoothly from beginning to end.

Here’s what to expect from our process.

1. Apply Securely Within Minutes – Move through our streamlined application within minutes and upload your business documents with zero risk.
2. Review Your Offers – Compare your offers with expert advice from our team and select the best one for your specific circumstances.
3. Receive Your Money – Seize an immediate opportunity to grow your business or tackle a new challenge with confidence.

Some people wait 6+ months for their SBA loan, while our clients can access their funds in as little as 45 days.

SBA Loan Application