SBA Loan Requirements 2022: How to Apply | Nav

small business administration loans are among the most popular options for little business loans. Why ? They offer low concern rates, predictable monthly payments, and a variety of loan programs that suit different business needs .
Because the U.S. Small Business Administration guarantees a good character of these loans, they are attractive to the banks and other lenders approved to offer them .
That being said, SBA lend does require certain qualifications, and the loanword process can feel complicated. Each SBA loanword has a slenderly different put of rules and requirements, which we ’ ll cover generally in this article .

SBA Loan Requirements

We ’ ll soon look at specifics for different types of SBA loans, but all of them have some overarch requirements :

  • Acceptable personal and business credit
  • For-profit business status
  • U.S.-based location and operations
  • Owner-supported and funded
  • Exhausted other funding options
  • Meet SBA size standards
  • Be in an SBA-acceptable industry
  • Owned by an eligible person

Keep reading to get details on each of these requirements, ampere well as an overview of more specifics for different programs .
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How to Qualify for an SBA Loan

To set yourself up for the greatest casual of being approved for a SBA loanword, take the follow steps :

Step 1: Build Your Credit

Most small business administration loans do not have a minimum credit score prerequisite, but rather require “ acceptable ” credit. We ’ ll explore credit score requirements for SBA loans in a moment .
If personal or business accredit scores have board for improvement, you ’ ll want to work on them. For exemplar, you may want to open a match of occupation credit cards, then pay your balance on time and possibly even in full every calendar month to start building a credit history. Take time to review your occupation citation reports and address any mistakes or problems .

Step 2: Create a Business Plan

You may not need a occupation design to get an SBA lend. not all loans or lenders require them. however, some will. And even if they don ’ deoxythymidine monophosphate, the information in your business plan can provide you and the lender with the information you need to demonstrate your ability to repay the loanword. If you don ’ t have one, get free business plan help at your local anesthetic SBDC or from a SCORE mentor .

Step 3: Document Collateral

You can ’ triiodothyronine be turned down for an SBA loanword good because you don ’ t have collateral. But most small business administration loans require you pledge collateral, such as real estate or equipment, if available. Know ahead of time what assets you have that can be used as collateral against the loanword and research marketplace value .
It ’ randomness besides deserving noting that most small business administration loans require a personal guarantee. That means you will be creditworthy personally to repay the debt if the business doesn ’ t pay it back .

Step 4: Gather Financial and Legal Documents

Your lender may require business bank explanation statements, business fiscal statements, and tied personal fiscal statements, indeed prepare to gather them. You may need to enlist your tax master ’ sulfur help for some of these, but at a minimal, your bookkeeping should be up to date. We ’ ll talk more about needed documents in a moment .
The oklahoman you start working on these tasks, the better-prepared you ’ ll be once you apply. For exercise, building your credit international relations and security network ’ t an overnight feat, then start to build or strengthen your credit profile before you urgently need fund .

What documents do you need for SBA loans?

Each lend program may have specific requirements, but these are the most common documents required for 7 ( a ) loans, and many will apply to other SBA loans ampere well .
first base, most borrowers will need to fill out the borrower information shape, SBA Form 1919. Some borrowers may besides need to fill out the statement of Personal History, SBA Form 912
commercial enterprise Financial Statements may be required including :

  • Year End Profit and Loss (P&L) statement for the last three years
  • Year End Balance Sheet for the last three years, including a detailed debt schedule 
  • Reconciliation of Net Worth 
  • Interim Balance Sheet 
  • Interim Profit & Loss Statements 
  • Projected Financial Statements that include month to month cash flow projections, for at least a one-year period.

other documents that may be required include :

  • Business tax returns for the last three years (if applicable)
  • Articles of incorporation 
  • Partnership agreement
  • Business plan and/or business overview and history
    Business owner resumes
  • Business lease

SBA Loan Requirements Overview

While the Small Business Administration offers a handful of different lend products, most share the same cosmopolitan requirements for anyone looking to borrow. These have generally not changed much over time, and you can expect to have to meet these qualifications before being considered a serious candidate for SBA loans. Know that the succeed aren ’ thymine black and white ; if, for example, you don ’ t have a solid business credit rating history but have a decent personal credit sexual conquest, you may however qualify .

Personal Credit Scores

You might be surprised to learn that your personal citation history matters when applying for an SBA lend. Most applications ask for your Social Security count and request permission to run a credit discipline for each owner with ownership of 20 % or more of the business. Expect your score to be a factor in your approval .
For most loans, the SBA requires “ acceptable credit, ” but does not set a minimal credit grade necessity. many lenders, however, will require a personal credit score of at least 680—700 or more .
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credit rating is a factor when applying for EIDL and PPP. Almost all forms of financing require a minimum credit score. *You get free access to your business credit reports and scores when you sign up for a free Nav report. Checking won ’ triiodothyronine hurt your credit scores .
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Business Credit History

While your personal score matters for SBA loans, your business recognition may be a factor as well. The come loans require the lender to obtain a FICO SBSS seduce. This score uses both personal and commercial enterprise credit data to create a single score, ranging from 0-300. The current minimum antimony scores are :

  • 7(a) Small Loans: 155
  • Community Advantage: 140
  • Express Bridge Loan Pilot Program: 130

If a borrower doesn ’ thymine meet that minimum score prerequisite, the lend application must undergo a more extensive credit follow-up .

For-Profit Business Status

small business administration loans are typically only available to “ for profit ” businesses. Charities and nonprofits are not normally eligible for such funds. ( There were some exceptions made for PPP and COVID-19 EIDL loans. ) If you aren ’ t a for-profit clientele, consider looking into early politics grants or loans available at .

U.S. Location

alone businesses that are both owned and operated in the U.S. stipulate for SBA loans. You must have a physical localization and mail address in the United States .

Owner Investment

Demonstrating that you have put your own funds into your commercial enterprise shows the SBA and lenders that you are invested in its achiever. This is referred to as “ equity injection. ” Equity injections are only required for certain SBA loans ; chiefly 7 ( a ) loans to startups less than a class old and when there is a change of ownership. But lenders may have their own equity injection requirements .

Limited Funding Options

small business administration loans are designed to help belittled businesses that would have disturb getting alike fund elsewhere. This is referred to as the “ recognition elsewhere test. ” You don ’ triiodothyronine inevitably have to provide rejection letters to prove this, though. typically your SBA lender will document this component .

SBA-Acceptable Industry

There are several industries where the SBA will not guarantee a loan. These may be referred to as “ restricted industries. ” These include businesses that :

  • Are primarily engaged in lending
  • Earn a passive income from real estate rental income and don’t provide additional services
  • Provide life insurance services
  • Offer pyramid sale distributions or compensations
  • Get over one-third of their annual revenue from gambling services
  • Enforce restrictive membership rules
  • Primarily offer religious services
  • Are government-owned (Native American tribal affiliations may still be eligible)
  • Sell live adult entertainment services
  • Lobby or engage primarily in political activities 
  • Package SBA loans
  • Are speculators (oil wild-catting or research and development)

note that industry is normally identified by a SIC or NAICS code. Make certain yours is discipline on your business recognition reports .

Ownership Requirements

An owner is anyone with 20 % or more ownership of the company. Each owner should expect to meet ownership requirements .
Those with certain criminal records may have trouble qualifying. The SBA prohibits loans to those who are Incarcerated, on probation, or on parole, ( an individual with a postpone prosecution, conditional discharge, regulate of protection, or who is on a sex wrongdoer register is treated as if the individual is on probation or parole ) ; or who are presently subject to an indictment, criminal information, arraignment, or early means by which formal condemnable charges are brought in any legal power .
Those who are delinquent or have defaulted on a federal lend ( including federal student loans ) or federal finance program may not be eligible, though there are exceptions .

Additional SBA Loan Requirements

In addition to the specifications above, SBA lenders may have other criteria to help them determine whether you ’ re a good credit risk .

  • Capital Requirements – How much money do you seek? Having a number in mind, along with your intended use for the cash, will help the bank see your vision for the future and their funding. It also demonstrates that you understand the requirements set by the SBA on how loan proceeds can be used. A cash flow report can help here.
  • Financial future – Do you have your business forecasts for the next few months? How about the next year? Be ready to show the bank that you’ve budgeted for the future, including how you’ll pay back the loan. 
  • Collateral – If you don’t have business assets to secure a loan, many SBA business loans require you to put up your home, vehicle, property, or other personal assets as a loan guarantee against non-payment. Make a list of real or fixed assets. The lender may not require you to completely collateralize a loan, but they will require all the collateral that you have.

Time in Business

technically, most small business administration loans are available to startups a well as established businesses, but lenders can set their own requirements. many lenders will want to see that you have been in commercial enterprise for at least two years, though some are more compromising.

eligibility for Export Express loans is limited to businesses that have been in operation, although not necessarily in exporting, for at least 12 entire months. however, there are exceptions .

SBA Loan Types Overview

Because the Small Business Administration offers a assortment of loan programs, each may have its own set of requirements. The list for each broadcast is very long and spelled out in Standard Operating Procedures. here ’ s a breakdown of each of the most democratic SBA loanword types .

SBA 504 Loans

Looking to buy, renovate or expand primarily owner-occupied commercial substantial estate ? The SBA 504 loan platform requirements should be of special sake to you. This loanword is besides called the CDC loan and is popular with borrowers looking to invest in real estate of the realm, construction, or equipment. There is no capital on the loan measure for these loans but the maximum SBA unsecured bond is $ 5 million .
These loans must be repaid in 10-20 years, depending on the loanword offered, making them a suitable option for long-run financing. SBA lenders broadly want to see a 10 % polish payment on the lend from the borrower. very estate of the realm purchased must be at least 51 % owner-occupied ( and more for new construction ) .

SBA 7(a) Loans

SBA 7 ( a ) loans are the most democratic character of SBA finance. They can be used for a variety of purposes such as working capital, buying equipment, purchasing a franchise, buying commercial real number estate, inventory, refinancing debt in certain situations and even starting a business .
These 7 ( a ) loans offer low-cost rates and a low SBA guarantee tip for loans of $ 5 million or less. repayment terms range from up to 10 years for short-run solve capital to 25 years for commercial real number estate .

SBA Microloans

SBA microloans may be a adept choice if you need less than $ 50,000 for your for-profit business. These small loans are available to for-profit businesses, including home businesses. ( The only non-profit organizations eligible are daycare businesses. ) These loans may be used to finance a brand-new business, submit to lender approval .
The SBA doesn ’ thymine make small business administration microloans. rather they are made by SBA intermediaries, which may include nonprofit lenders such as Community Development Financial Institutions ( CDFIs ) .
You ’ ll have up to seven years to repay the lend. In addition to committing to being on-time with your SBA loanword payment, you may besides be required to engage in discipline or development programs that are available to your business as partially of the microloan terms. This is known as “ technical assistance. ” The loanword program is designed not good to give you money, but to besides help you expand your business cognition and grow your caller in a way that positions your business more competitively in the marketplace .
Entrepreneurs can use SBA microloan funds for working capital, inventory, supplies, furniture, fixtures, machinery or equipment. They may be used to refinance business debt if it will improve the cash flow of the borrower .

SBA Loan Rates and Credit Scores

With most types of small business loans, your credit scores not alone determine whether you qualify but may besides affect the interest rate you pay. Most small business administration loan rates are quite low-cost to begin with, and utmost rates are set by the SBA. however, some SBA lend rates may be determined in part by credit. For model, a share of CDC 504 loans are made by a deposit or fiscal institution which can set the rate for that part of the lend .

What disqualifies you from getting an SBA loan?

The main reasons a borrower may be disqualified from getting an small business administration loans are :

  • Poor credit
  • Prohibited industry
  • Not qualified as a small business
  • Can’t demonstrate ability to repay the loan
  • Criminal history


In 2020, the CARES Act created two SBA loans to assist businesses hit hard by the COVID-19 pandemic : palatopharyngoplasty loans and EIDL loans. These loan programs are now closed to new applicants. however, we will mention them briefly .

PPP Loan

The Paycheck Protection Program loan was established to assist struggling businesses during the pandemic. The maximum lend total was 2.5 times average monthly payroll, not to exceed $ 10 million. This broadcast has closed to new applicants .


The other SBA loanword under the CARES Act was the COVID-19 Economic Injury Disaster Loan, or COVID-19 EIDL. Loan proceeds ( up to $ 2 million ) can be used as working capital to pay debts, payroll, accounts collectible, and other bills. There was besides a concession of $ 1,000 per employee, up to $ 10,000, that does not have to be repaid. The grant was later expanded with the Targeted EIDL Advance of up to $ 15,000 sum .

SBA Loan Requirements FAQs

here are some frequently asked questions about SBA loans .

Are there separate SBA loan requirements for startup companies?

As mentioned before, most small business administration loans don ’ t have a prison term in business requirement, but lenders who make these loans frequently do. As a result, the microloan program is considered the default when it comes to SBA loans for startup .
however, around 20 % of SBA 7 ( a ) funds go to startups, indeed if you meet other requirements and have a upstanding business design, you may want to seek out one of these loans. Owner fairness injection requirements will apply to startup loans .

What are the SBA 7(a) loan collateral requirements?

As stated above, lenders by and large prefer collateral in the event that you default on the lend. however, the SBA does not permit a lender to reject an lotion merely because collateral is not available .
If collateral is available, though, you may be required to pledge it to qualify. Expect a smaller lend to have smaller collateral requirements ; loans under $ 25,000 broadly do not require collateral .

How much of a down payment is required for an SBA loan?

Certain SBA loans may require a “ down requital ” in the form of equity injection. A minimum of 10 % is common. Depending on the requirements of the particular lend, this equity injection may come in the form of cash that international relations and security network ’ thyroxine borrowed, a personal loanword that can be serviced without using funds from the business, assets other than cash ( verified by an independent appraisal ) and/or debt that is on wax standby ( no payments of principal or interest for the term of the SBA-guaranteed loan ) .

Is it hard to get an SBA loan?

Yes and no. Compared to some other business lend options, SBA loans normally have higher eligibility standards. But when compared to traditional loans, like bank loans, they are frequently like in terms of the lotion process .
At the lapp time, these loans are designed to help businesses that can ’ t get alike credit elsewhere, so you may have more luck getting an SBA lend than a comparable traditional lend from a fiscal institution. Just expect to put in some campaign .

How long does it take to get approved for an SBA loan?

small business administration loans aren ’ thymine known for quick-turnaround times. If you ’ re seeking to get approved within days—and receive your cash within a workweek or less—these loans might not be for you. An alternative lender might be a better option for promptly finance. Expect to spend time preparing your documents, applying, and hearing back about the status of your SBA loanword. Some SBA lenders may give you a answer within 3-10 commercial enterprise days, but getting the funds will take longer. SBA Express loans can sometimes get approval within 24-48 hours from the SBA, but the lend won ’ thyroxine close that quickly. If you need money faster, again, option loans might be a better option .

Nav’s Final Word: SBA Loan Requirements

As a little business owner, you need to stay apprised of financing options so that, should the day come that you want to grow your business, you know the best financing solution for your needs .
even if right now you don ’ deoxythymidine monophosphate plan to apply for an SBA loanword program, it ’ sulfur still a wise idea to work on building your credit and organizing your finances so that, down the road, if you decide to apply, you are likely to qualify for one of these loans .
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This article was primitively written on July 2, 2019 and updated on June 2, 2022 .

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