Considering an SBA loan can be a great strategy for small businesses looking to expand in the United States. These loans, backed by the Small Business Administration, offer favorable terms in terms of interest rates and fees. However, to maximize your chances of success in 2025, it is essential to understand the eligibility requirements which may vary depending on the type of SBA loan chosen. In this article, we will explore the general criteria as well as the specifics according to the different SBA loan programs, in order to guide you in your preparation.
General SBA Loan Eligibility Criteria
When it comes to SBA loans, one of the first requirements is that your business must be qualified as a small business. This criterion may differ depending on the sector of activity, with the size generally being determined by the number of employees or annual turnover. For example, a restaurant business can have a maximum of $47 million in annual revenue to be considered small.
Type and size of business
Only the for-profit companies based in the United States are eligible for an SBA loan. It is also important that the company is majority owned by U.S. citizens or legal permanent residents.
Credit rating and personal contribution
The requirements for credit score may vary by lender and SBA loan type. While it is possible to get a loan with bad credit, certain minimum requirements like a FICO score of 155 for small 7(a) loans may apply.
Additionally, a personal contribution of approximately 10% to 20% may be required. This reassures lenders by showing that the owner is financially committed to the project.
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Documents Needed for an SBA Loan Application
To meet lenders’ requirements, businesses will need to provide several documents when applying for a loan. These documents help demonstrate the viability and credibility of the requesting company.
Business plan and financial statements
A business plan detailed is often required to show that your business has a clear path to profitability. Accompanied by financial statements, including the balance sheet, income statement and cash flow projections, this file is crucial to proving your ability to repay the loan.
Other required documents
The company’s three-year tax history may be requested, as well as legal documents such as the company’s articles of incorporation, business licenses and any legal judgments. These elements ensure that the company is legally compliant.
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Specificities depending on the type of SBA loan
Each type of SBA loan has its own criteria and limitations. It is therefore important to choose the right program based on the specific needs of your business.
7(a) Loans
THE 7(a) loans are the most popular form of SBA support and can be used for a variety of business needs, including working capital and purchasing real estate. Most 7(a) loans require a 10% down payment and a minimum credit score around 640.
504 Loans
THE loans 504 are specifically intended for financing major fixed assets such as real estate or equipment. Issued by certified nonprofit development companies, these loans require the business to have tangible net assets of less than $15 million.
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Alternatives to SBA Loans
If you don’t qualify for SBA or find the process too cumbersome, consider other financing options like a cash advance from Shopify Capital, which is based on sales history and provides more flexibility in how funds are used.
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