Things You'll Need:
- Company financial statements
- SBA Business Loan Application
- Business Plan
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Step 1
Review the specialty SBA business loan programs to see if you qualify. These two programs offer an easier application process and affordable terms. For long-term start-up investments, such as real estate or equipment, you may benefit from the 504 loan program. Under this program, funds borrowed cannot be used to pay for debts, and the borrower must contribute 10 percent of the loan amount. If you need to borrow less than $35,000, you may be interested in the Microloan 7(m) program . Funds cannot be used for debt or real estate, but no upfront investment is required from the borrower. Funds for the Microloan program are provided by the SBA, making it the simplest type of loan offered by this organization.
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Step 2
Understand the SBA 7(a) loan program. This is the primary SBA business loan option for small businesses who may not qualify for the specialty 504 or Microloan programs. Funds borrowed under a 7(a) loan can be used for any business expense, including debts and real estate. Business owners have 10 years to repay most loans, though terms up to 25 years are provided for money used to buy fixed assets.
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Step 3
Determine whether you meet the eligibility requirements of this program before filling out an application. To be eligible, you must apply for a loan that is less than $2 million. Most types of businesses are eligible, though those involved in real estate, speculative investment, lending, religion, gambling or illegal activities are automatically rejected for these loans.
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Step 4
Compare your needs to the approved uses of SBA business loan funds. SBA business loans can be used for any sound business purpose but may not be used to refinance debt, repay delinquent taxes or help owners sell or transfer the business. If you need funds for any of those reasons, you are ineligible to apply.
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Step 5
Evaluate your own financial status. SBA business loans are not available to owners who have any other potential financial sources. This means that you, or any of your partners who control 20 percent or more of the company, must utilize savings and other assets to finance the business before loans will be granted. In addition, all owners of the company must be willing to personally guarantee the loan, which puts personal assets at risk, including homes, cars and financial accounts.
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Step 6
Complete the SBA business loan application on SBA.gov (see Reference). As part of this application, you will need a complete set of company financial documents and, in most cases, a solid business plan. The SBA and affiliated lenders will review your information. The primary factors they use when awarding loans are the business's ability to repay the loan, character and credit history of owners, and the amount of investment the owner's have made in the business.
