SBA loans are some of the most favorable loans in the business world. The SBA just backs the loan. Businesses work through a lender to get the financing. SBA loans typically have longer repayment terms, reasonable interest rates and varying sizes. This makes it financially advantageous for small business owners and gives them a competitive edge.

Qualifying for an SBA loan isn’t easy. Although lenders may require different criteria, typically, the small business applying for the loan must be able to meet all debt obligations, including the SBA loan, from the current cash flow of the business.

Other qualifications include:

  • At least two years in business (some startups do receive financing)
  • Personal credit score of 620 or higher
  • More than $100,000 in annual revenue

Lenders may look at each application on a case by case basis. Please note that businesses must also fall within certain industries, such as landscaping, restaurants, medical providers and trucking. The SBA wants to help local entrepreneurs build businesses that will benefit the community.

What You Need to Get an SBA Loan

The SBA loan application is complex, much like a traditional loan. You should be prepared to have your personal and business tax returns for the past few years, profit and loss statements, bank statements and a balance sheet. Your lender will also likely have you submit a business plan outlining what the funds will be used for.

There are different types of SBA loans. Which one you ask for depends on how you will use the funding. Generally, SBA loans are for long-term improvements to your business, equipment, real estate, renovations or inventory.

When you apply for an SBA loan, the lender will look at your management ability and cash flow. Experience in your industry is always a plus. However, if you aren’t ready for an SBA loan, there are plenty of financing opportunities that can help you take your business to the next level. Talk to the financial specialists with BizCap Commercial Finance today.