SBA Small Business Loans 2024

What down payment is required to obtain an SBA loan?

A down payment of 10-30% is usually required to obtain an SBA loan, though this does vary depending on your circumstances and the type of loan or program you’re looking to secure.

What are the requirements to obtain an SBA loan?

The exact requirements you need to meet will depend on your personal circumstances and the type of loan you want to obtain. That said, you’ll need:

• Looking to borrow between $5,000 and $5 million
• Want to borrow over 10 years (or 25 years for real estate)
• To operate a for-profit business
• Operate your business in the US
• Have explored alternative funding before seeking financial assistance
• Are facing no criminal charges
• Have fewer than 500 employees
• Less than $7.5 million in revenue for the past 3 years
• Net income under $5 million
• Tangible net worth under $15 million
• You can’t have any delinquent debts

You’re also much more likely to be approved if:

• You have a credit score over 680
• No recent history of bankruptcies, foreclosures, tax liens
• Have been in business for 2 years or more
• Can provide collateral for your loan if it’s for more than $25,000
• You can make a 10% down payment
• You can prove your current cash flow and have good forecasts
• You have “good character” according to the SBA (essentially means you’re a good and moral business person)

What minimum credit score do I need to qualify for an SBA loan?

There is no official minimum credit score, but you’re unlikely to get approved if your credit score is under 680, especially if it’s low due to recent financial difficulties.

How to qualify for an SBA loan

To qualify for an SBA loan, you’ll need to:

• Have a good personal and business credit score – your personal score should be 680 or higher before you think about applying for an SBA loan.
• Know your preferred lender’s minimum requirements and meet them - these are usually the same as those outlined for the SBA’s eligibility requirements, but they do sometimes differ, so do your research.
• Have a strong business plan and a clear purpose for the money you wish to borrow – if you don’t have your business plan down on paper and ready to share with others, consider working with an expert business plan writer to develop your plan. This will show any potential lender that you are serious about your business’s growth and have a good plan for how you will use your funding to grow your business.
• Have strong financial documents showing your revenue, money management, and cashflow forecast. Here are some of the documents you’ll need:
  • Personal tax return(s)
  • Business tax returns
  • Your balance sheet and income statement
  • You may need personal bank statements
  • Business bank statements
  • A photocopy of your ID
  • Any relevant titles, deeds, or commercial leases
  • Your business licenses
  • Proof of incorporation
  • Details of your business experience (this is usually included in the business plan)
  • Your financial projections
• Be able to provide collateral for the loan – this is necessary if you’re borrowing more than $25,000. If you are one of many owners, each owner must put up some collateral or a personal guarantee. It’s best to check with the lender you’re working with as some are strict here, while others require very little.

How to apply for an SBA loan

When you’re ready to start your application, make sure you meet the right eligibility requirements and have the majority (if not all) of your required documents ready to share. You’ll then need to find a local or online SBA lender to work with. This process is the same as when you look for any other funding, you simply need to do your research, compare rates, fees, and requirements, and find the lender you’d most like to work with. Start with the lenders in our comparison tables and expand your search from there. When you find one you’d like to work with, you can start your application.

Remember that applying for an SBA loan is not a fast process – while you may be able to attain your loan within a few weeks, it may take months. If you need to find funding in a shorter time frame, look at alternative business loans that are not secured by the SBA.