Is a SBA Loan Easy to Get? A Comprehensive Guide

SBA loans are known for their lower rates and longer terms than conventional loans. While it's easier for a small business to qualify for an SBA loan than a conventional loan, the application process requires extensive documentation of your finances. Unfortunately, owning a new business is one of the main reasons why it's difficult to get an SBA loan. Traditional lenders view startup financing as “risky” and generally require that the company have at least two years of history before considering an approval.

Lenders are more likely to approve a loan application when consistent and positive cash flow can be demonstrated, ideally over several years. Every small business owner should start somewhere, but not being able to show a history of bank income makes it difficult to qualify for an SBA loan. Compared to other business loan options, SBA loans typically have higher eligibility standards. However, compared to traditional loans, such as bank loans, they tend to be similar in terms of the application process.

Although the SBA doesn't define the term self-employed, it reserves its lending programs for small businesses. Technically, most SBA loans are available to both start-ups and established businesses, but lenders can set their own requirements. However, in general, applicants for business owners must provide a guarantee and personally guarantee the loan, in addition to demonstrating their qualifications. If you're looking to apply for an SBA loan, we've segmented the process into five steps that make it easy to understand.

As mentioned above, most SBA loans don't require working time, but the lenders that provide these loans usually do. SBA Express loans can sometimes get SBA approval within 24 to 48 hours, but the loan doesn't close as quickly. If your credit rating is low, lenders may conclude that you will have difficulty paying your loan in addition to your other monthly payments. While the Small Business Administration offers a handful of different credit products, most share the same general requirements for anyone looking to apply for a loan.

If you're not worried about getting approved for an SBA loan because your FICO score is already over 600, it's never a bad idea to keep increasing your numbers. However, the SBA maintains some general standards that all applicants must meet if they want to get approved for a loan. Know beforehand what assets you have that can be used as collateral against the loan and research the market value. The Small Business Administration guarantees a good portion of these loans, and they are attractive to banks and other lenders approved to offer them.

For most loans, the SBA requires “acceptable credit” but does not establish a minimum credit rating requirement. Some applicants approach the process too arrogantly, either because they don't take the time to understand the SBA loan requirements or they don't prepare the documentation required by the bank. To make sure you get approved for an SBA loan, make sure you understand all of the requirements and prepare all of your documents ahead of time.

Lorrie Tappen
Lorrie Tappen

Incurable travel fan. Lifelong internet buff. Amateur zombie advocate. Friendly web ninja. Proud food junkie.

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