It also means the SBA requires personal financial information from you and the major stakeholders in your company. This is because many of these loans require the borrower to sign a personal guarantee for the loan. It's important to be aware of what you're required to submit before you start the process. These documents can include:. Key takeaway: When you apply for an SBA loan, you must provide extensive financial documentation about your business and all business owners.
Business owners must sign personal guarantees for SBA loans. That largely depends on your financial situation. The SBA is looking to provide loans for businesses that may not otherwise qualify. However, that doesn't mean the SBA is looking to invest in failing businesses. If your business is in financial trouble — not due to a natural disaster or a national economic event, like the COVID pandemic — it may still be difficult to be approved an SBA loan.
You may need to provide more documentation, and it may take longer, but the overall qualifications for the SBA are usually less stringent compared to those of a regular bank. This depends largely on your business's overall financial situation. If your company is struggling because of some outside event, like a hurricane or earthquake, you may be able to qualify, even if you're in a dire financial situation.
But, if your business has been poorly run and you have a bad financial history that is not the result of a national event, you may still not qualify with the SBA for a loan. Approval typically depends on the type of loan you are seeking. It's not unusual for the review and approval process to take between 60 and days. According to Funding Circle, Express loans take up to 36 hours, but you must also receive approval from the lender, which can take several weeks.
For standard loans, the SBA typically approves within seven to 10 days. The lender, again, may also take several weeks to reach a decision, which could take six weeks or more. There's extensive documentation to review, since businesses often have to provide more financial and logistical documentation for an SBA loan than a bank loan. Plus, representatives at both your local bank and the SBA have to review it before you are approved.
According to the SBA, companies that are eligible for a 7 a loan must operate in the United States, it must be for-profit, there must be reasonable equity for the owner to invest, and the business owner should use financial resources other than the loan , including personal savings and assets before seeking funding from the SBA. Lenders have certain requirements, too, to qualify for SBA loans. They may also require a credit score of or higher. When you're seeking an SBA loan, ask about the bank's requirements upfront.
And, while you may not meet the qualification criteria from one lender, another lender may consider granting you a loan, so always explore your options. In many cases, the down payment needed to secure an SBA loan is substantially lower than other types of loans. Business overview and history that explains why you need an SBA loan. Matt D'Angelo. SBA loans have low rates and long terms, making them a desirable option for small business owners.
Learn what types of SBA loans are available and how to apply for one. SBA loans typically have lower rates and longer terms than you could otherwise qualify for with a conventional loan. Although it's easier for a small business to qualify for an SBA loan than a conventional loan, the application requires that you provide extensive documentation about your finances. The amount of money you can borrow depends on the type of SBA loan you apply for. This article is for small business owners who want to learn more about SBA loans and how to apply for them.
Flexible payment options Due to the nature of the SBA's loan program, you may be given flexibility when repaying your loan. It's easier to qualify If you can meet the SBA standards, you'll be able to get a loan. Longer terms Longer loan terms mean you have more time to repay what you've borrowed.
SBA Veterans Advantage These loans are designed for small businesses owned by veterans and their families.
CapLines This loan package is for working capital loans. International trade loans International trade loans are for 7 a qualifiers who engage in international trade. Export Working Capital Program This loan program is for short-term borrowers with businesses in indirect or direct exporting. Export Express This loan program is similar to the SBAExpress loan package, but it's geared toward businesses looking to expand into the export markets. Apply through your local bank. Visit a Small Business Development Center.
While you're at the center, take advantage of some of the agency's other services, which include: Business plan development Manufacturing assistance Financial packaging and lending assistance Exporting and importing support Disaster recovery assistance Procurement and contracting aid Market research help Healthcare guidance Use Lender Match.
Make sure you have the following ready for your potential new lender: Your business plan The amount of money needed and how you'll use the funds Your credit history Financial projections Some form of collateral Industry experience within your field A lot of this documentation and information will be required of you when applying for an SBA loan, regardless of whether it's online or not.
Typical documentation needed for an SBA loan The SBA requires extensive financial documentation before you can get approved for a loan. Can you get an SBA loan with no money? How long does it take to get approved for an SBA loan? The U. If you own a plumbing business, and you want to expand your company, buy a competitor, or refinance business debt, getting SBA financing could be one of the best way to do so.
Do you need to have a physical office or sell goods and services in person to qualify for an SBA loan? The answer is no.
Online and fully-remote companies are just as eligible for SBA loans as their traditional counterparts. Please Read : This website is independently owned and operated and has no government affiliation. Get A Free quote. Additional Beneficial Business Qualities In addition to the eligibility requirements, there are a few additional qualities which can increase your likelihood of SBA 7 a loan approval. Learn More About Eligible Industries. Learn more about startup loans.
Navigating the SBA 7 a loan application process is complicated. We get it! From the SBA7a. SBA Loans for Plumbers. There are multiple types of SBA loans — each with its own terms and conditions. The best SBA loan for you will depend on what you plan to use the funding for. Working capital, expansion and equipment purchases. Fast funding for working capital, expansion and real estate and equipment purchases.
Purchase long-term, fixed assets like land, machinery and facilities. Working capital, inventory, supplies, equipment and machinery. Repair physical damage due to a declared disaster and cover operating expenses. Normal business purposes; cannot be used for revolving credit.
Working capital to support export sales. Long-term funding to expand export sales or modernize to contend with foreign competitors. The SBA also offers funding through lines of credit , small-business grants and loan programs for veterans.
Next steps to getting an SBA loan:. Will your business qualify? Learn about SBA loan requirements. See current SBA loan rates. Per federal rules, participating lenders base SBA loan interest rates on the prime rate plus a markup rate known as the spread. Note that the APR on a loan is different from the interest rate. The APR is a percentage that includes all loan fees in addition to the interest rate.
Fees for SBA loans usually consist of an upfront guarantee fee, based on the loan amount and the maturity of the loan, and a yearly service fee — based on the guaranteed portion of the outstanding balance. The SBA reassesses its fee structure each year. The loan term will depend on how you plan to use the money. The current maximum maturities are:. Working capital or inventory loan: 10 years. To qualify for an SBA loan , lenders typically like to see at least two years in business, strong annual revenue and a good credit score, which starts around If your business is struggling, an SBA loan is probably out of the question.
If you think you qualify, the best place to start is the SBA website, which includes a loan application checklist. Use this to gather your documents, including your tax returns and business records. Here are some of the documents you will need before applying:. The SBA offers a convenient Lender Match tool to match potential borrowers with lenders within two days.
Ask your potential lender these questions:. How experienced is your staff in the process? What is the dollar range of the loans you make?
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