Qualifying For An SBA Loan

Who qualifies for an SBA Loan?

    This post will discuss the simplest way to qualify for an SBA Loan.  ​SBA loans reduce the risk to lenders by giving them a gov't guarantee.  This  gives small businesses easier access to capital.  ​
   SBA loans are only for owner operated businesses not investors.  If you are trying to get a loan for one of your apartment buildings you won't qualify for an SBA loan.  If you want to refinance your owner occupied and operated office building you should qualify.  
   There are some restricted industries that can be found here: 

Industries

     Most industries are eligible.  Non profits, some financial services, speculative businesses, and other don't qualify. 
​
     Speaking from an underwriting basis, here are some things you would need to get approved:
- Good personal credit (600 min score with limited issues)
- Good cash flow (debt coverage ratio of 1.15 or better)
- 85%+ collateral securing the loan (real estate, equipment, receivables, etc)
- Experience 
- 3yrs of business tax returns (preferred but not required)
- 10% minimum cash contribution to the loan (not required on refinances)
- $5MM or less on SBA 7(a) or $10MM or less on SBA 504 real estate

    SBA loan underwriters can get creative in these areas to help loans get approved so it's always good to check with your bank.  One thing to consider is all SBA lenders are not created equal.  Many local banks underwrite a limited number of these loans each year and are inexperienced.  It's good to find an experienced SBA lender that has the authority to approve these loans in house (local banks don't have this) to speed up the process.  

       This article is not all inclusive, it's best to consult with a banker to see if an SBA loan can help you. 

​-Spencer