Finimpact

Conclusion

Starting a business can take a lot of money, and many business owners don’t have all of that cash upfront. An SBA startup loan can help ease the burden of having to purchase retail space, order inventory, and purchase equipment all at once. Head to the SBA’s website to get the full details on these loans and find lenders that offer them. 

FAQ

Can I get an SBA loan to start a business?
The loans we’ve discussed in this article can mainly be used to start a business, but you’ll have more limited options than those who have a record of a successful business. How long you need to be in business, depends on the lender you choose, as they have their own specific requirements.
Do SBA startup loans require collateral?
Whether or not you need to put up collateral largely depends on the lender you choose to work with. Some lenders that offer more relaxed credit requirements will require collateral to ensure they’ll get something back if you stop making payments. Additionally, larger loans require collateral much of the time, while smaller loans aren’t as risky for the lender, so they don’t require collateral.
What documents are needed to apply for an SBA loan?
When you apply for an SBA loan, especially one that’s for a business you’re just starting, you’ll need to supply any documentation that proves you have a solid business plan and the means to pay back the loan. This can include tax returns, cash-flow projections, your business plan, and explanations of how you’ll use any financing. The exact documents you need depend on the lender you’re working with.
Is it hard to get approved for an SBA loan?
SBA Loans often have less strict requirements (but that depends on the lender you’re working with) than other loan options. While it’s not difficult to get approved, it takes some work on your part to find the right lender.
What can disqualify you from getting an SBA loan?
SBA Loans are loans after all, so there are some borrowers that won’t qualify. For starters, if you have very bad credit, you likely won’t find a lender willing to work with you. No matter how good your business plan is if you have a history of poor borrowing, lenders don’t want to take on the risk.

Additionally, those who are trying to get a loan just because they don’t want to spend their personal savings won’t qualify. The SBA requires that you use your own money before seeking them out.

What is the easiest SBA loan to get?
Loans that offer smaller amounts, like SBA microloans and SBA Express Loans, are often easier to get. Since the lender is taking on less risk by offering you a smaller loan, they have more relaxed requirements.

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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