The SBA loan is very popular because it has good terms and conditions. The Small Business Administration isn’t actually in the loan business, but it does guarantee loans to allow banks and lenders to offer loans to small businesses that might not otherwise qualify. SBA loans are very affordable, but can be difficult to qualify for.
What are the qualifications for an SBA loan?
The specifics of an SBA loan are quite complex, but there are some general conditions you should be prepared to meet. Your business has to qualify as a small business, which means you can’t have more than 500 employees or $7 million in annual revenue. Some types of businesses don’t qualify for SBA loans, such as banks or non-profits. But most industries do qualify, restaurants, healthcare, hotels and more.
Your business must be able to service the loan and your other debt obligations. Although applicants are reviewed on a case-by-case basis, you should meet these criteria:
• Be in business for at least two years
• Have a personal credit score of 620 or higher
• Have more than $100,000 in annual revenue
The Application Process
Be prepared for a complex application to get an SBA loan. It is worth applying if you qualify, because the interest rates are very favorable, but you do need to provide quite a bit of information. The lender will need to see personal and business tax returns, profit and loss statements, bank statements and a balance sheet.
Although SBA loans are competitive, they are quite beneficial to small businesses. If you’re just starting out in business, you should put together a strategy that lets you qualify for an SBA loan in a couple of years. If you fail to plan, you plan to fail.
Contact Bear River Financial for more information about SBA loans and alternative financing options for your business.