SBA Loans for Startups: Guide to Navigating SBA loans to Fund Your Startup

Pro Business Plans
Oct 4, 2020 · 7 min read

Last Updated: 3/30/2021

SBA loans can provide the financing you need for your startup. These credits, sponsored by the Small Business Administration (SBA), are financed through approved lenders.

However, the SBA guarantees somewhere in the range of 50 and 90% of the advance should it go into default, encouraging the banks to loan to entrepreneurs with the best rates. Due to the excellent relationship between the SBA and moneylenders, startups can acquire financing to expand their businesses with affordable repayment terms and low-interest rates.

In this guide, you will get detailed information regarding SBA, SBA loan, SBA loan types, qualifying criteria for SBA loans, qualifying SBA lenders, and application for SBA loan.

What is SBA?

What is an SBA Loan?

SBA Loan Types

Overview of SBA Loans

SBA Express Loans

With SBA Express Loan, you can get up to $350,000. A loan up to $100,000 doesn’t need any evidence of income. Notwithstanding, credits above $ 100,000 require two years of business record and personal tax returns.

The interest rate on this advance changes quarterly, and it ranges from prime plus1 to prime plus 4. The loan repayment period is between 3–5 years; however, there is a choice to extend it to 7 years.

SBA 7 (A) Loans

SBA 504 Financing


SBA Disaster Loan

Who Qualifies for SBA Loan?

SBA Loan Qualifications

All businesses can qualify for SBA loans as long as they have a decent credit score. Before you apply for an SBA credit, remember that it requires much documentation, and it takes time for the loan to be approved. If you need to develop your business, don’t spare a moment to go for an SBA credit.

Here are the requirements for qualifying for an SBA loan:

• A credit score of at least 620

• You must have at least two years of work experience in maintaining your business. However, startups can qualify for the microloans without this necessity.

• You must have more than $100,000 yearly income

  • You must be doing business in the US

Qualifications for SBA Lenders

Have questions about business planning or the capital raising process? Contact our experts at Pro Business Plans by scheduling a free consultation.

7(a) Credit Program

To partake in the 7(a) advance program, a lender must meet the following criteria:

o Have a continuing ability to assess, measure, close, disburse, service, and liquidate small business loans.

o Be available to general society to give credits (and not be a financing auxiliary, connected principally in financing the tasks of a partner).

o Have a great character and reputation, and in any case, meet and keep up the moral necessities as distinguished in 13 CFR Part 120.140.

o Be administered and analyzed by a state or government administrative power, palatable to the SBA.

CDC/504 Advance Program

Commonly, a project involving a 504 credit incorporates:

An advance secured from a private segment bank with a senior lien concealing to 50 percent of the venture cost.

An advance secured from a CDC and backed by a 100% SBA-ensured debenture — with a lesser lien covering up to 40 percent of the total cost, and at least 10% of the borrower contribution.

To partake in the CDC/504 advance program, a lender must meet certain conditions, including but not limited to:

o Be a charitable enterprise on favorable terms

o Have a board of directors with at least nine voting directors

o Have full-time professional administration and a full-time proficient staff

o Meet a minimum level of credit activity.

Microloan Program

To take part in the Microloan program, a lender must meet the following requirements:

o Be a private non-profit, quasi-public, or family-owned organization.

o Have more than one year of experience in the lending and recoveries of microloans

o Have at least one year of experience providing in-house marketing, management, and specialized help to its Micro-borrowers.

Summary Overview

Summary of SBA Loans

Step by Step Instructions to Applying for an SBA Loan

If you need to improve your chances of getting an SBA advance, it is essential to have your collateral ready prepared because it is one of the necessities for some credit types. Likewise, note that another qualification for this advance is your business performance.

Moreover, a few reports, such as business plans are fundamental while applying for an SBA advance. Be ready to fill in a detailed loan form with specifics concerning collateral, business, and a clarification on how you will utilize the credit.

In short, coming up next is a rundown of a portion of the reports you need to apply for an SBA advance:

• Personal tax returns

• Business tax returns

• Bank statements

• Business plan

• Driving permit

• Profit and loss statements

• Statement regarding your own set of experiences

  • Business rent

The SBA Loan P

General Timeline for SBA Loan Process

Final Thoughts

The SBA guarantees up 80% of the advance sum, implying that the obligation will be reimbursed if there should arise an occurrence of default. Through this assurance, moneylenders can serenely propel credit to little business people, notwithstanding their risks.

Pro Business Plans is a leading team of business plan writers according to Wimgo, a professional services ranking website.

Pro Business Plans

Insights | Resources | Market Intelligence