How To Get an SBA Startup Loan in 6 Steps

To get a Small Business Administration (SBA) loan as a startup business, you’ll need to do some preparation and research before you even submit your application. Startup companies have ahigh failure rate, so these loans often involve a lot of paperwork to give lenders a thorough understanding of your business finances, credit, and business plan.

步骤1:Create a Business Plan

A business plan is a document that details your company’s goals and how it will achieve them. It provides details on a company’s leadership team and its qualifications, background, marketing strategy, and income projections. For startup companies with little or no prior history of being in business, lenders will use this document to determine the chance that your business will succeed and whether it will issue a loan based on the level of risk involved.

The specific sections in your business plan may vary depending on your industry, but commonly include the following:

• Executive summary:This is an overview of the various aspects of your business plan. It should briefly discuss what your business products and services consist of, what your company’s goals are, and how you plan on achieving them.
• Product or services overview:You should go into as much detail as possible regarding your company’s product or services. This section should discuss how your product delivers value to consumers, expenses, and pricing.
• Competitor and industry analysis:This section of the business plan should contain information about the industry and who your competitors are. You should show growth potential, the added value your product provides, and what differentiates your product or service from that of competitors.
• Target market:This section should contain information about who your ideal customers are, and how your product or service will be used.
• Marketing strategy:A successful marketing strategy will attract and inform customers about your product. You should discuss what marketing channels you intend on using, how it may differ from competitors, and why you believe it will be effective.
• Financial analysis and plan:This section should cover several items, such as your company’s budget, expected monthly cash flow, revenue projections, expenses, and what you intend on doing with the proceeds with the SBA loan.
• Qualifications of leadership team:Including a resume of all members of the leadership team can give lenders insight as to your company’s relevant skills and how it can be used to create a profitable business.

Step 2: Determine How Much Funding You Need

For this step, you’ll need to have an understanding of your costs and projected revenue. You should know how much cash you’ll need, when you need it, what it will be used for, and the revenue it is expected to generate. You should also prioritize using the funds on the most important aspects of the business, differentiating between mission-critical items and items that aren’t urgent.

A cash flow analysis for the next 12 to 36 months can be helpful, and you should include recurring and one-time expenses. Requesting too little cash could hinder your company’s ability to operate efficiently. On the other hand, requesting too much cash could result in unnecessary interest expenses and can also result in your loan application being denied.

Step 3: Review Your SBA Startup Loan Options

There are several differenttypes of SBA startup business loans, including the following:

• SBA 7(a) loans:This is the most common type of financing offered by the SBA. You can obtain up to $5 million in financing that can be used for working capital, refinancing current business debt, or purchasing equipment, furniture, fixture, and supplies.
• SBA Microloans:This can provide up to $50,000 in funds that can be used to help start, rebuild, repair, or improve your business. Some examples include purchasing supplies, furniture, machinery, equipment, or other working capital. Microloans cannot be used to pay existing debts or acquire real estate.
• SBA Community Advantage loans:This is a temporary program that is designed to help businesses in underserved areas. Businesses that are eligible can obtain loans up to $350,000. The program currently runs through September 30, 2024.
• SBA CDC/504 loans:These loans are available through Certified Development Companies (CDCs) and can provide up to $5 million in financing. 504 loans must be used to acquire or improve assets that promote business growth and job creation. Some examples of qualifying asset purchases include buildings, land, machinery, and equipment. 504 loans cannot be used for working capital or paying debt.

Step 4: Consider Your SBA Loan Eligibility

To be eligible for an SBA startup loan, there are general requirements that must be met, regardless of the type of loan you need. Additional requirements can also apply depending on the specific type you’re applying for and the lender you’re using.

General SBA Requirements

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SBA Requirements by Loan Type

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Lender-specific Requirements

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Step 5: Find an SBA Lender

You can begin your search for an SBA lender by using our list of thebest SBA lenders, all of whom are highly knowledgeable and experienced in navigating the SBA process. You can also conduct your own research. SBA loans are offered by a number of lending and financial institutions such as banks, credit unions, online lenders, and SBA brokers.

We recommend working with SBA-preferred lenders, as they have gone through extensive training and review by the SBA and have the authority to make a loan decision on its behalf. Working with one of these lenders eliminates the need for a second review by the SBA, which can save you time and money.

SBA Lender Match

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SBA贷款中间物ries

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CDC/504 Loans

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SBA Brokers

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Other Factors to Consider

With little or no history of being in business, SBA startup loans can be difficult to obtain. To make the most of your time, here are some additional questions you should ask to ensure you’re working with a lender that is likely to issue a loan approval:

• Are you an SBA preferred lender?
• Does your company issue SBA loans to startup businesses?
• What are your company’s minimum requirements for time in business and revenue?
• 你熟悉企业发放贷款吗in my industry?
• How long will it take to get approved?
• Does the lender have high customer reviews?
• What are your company’s customer service hours?

Step 6: Submit Your Application & Provide Required Documents

After you’ve found an SBA lender to work with, you’ll need to complete its loan application and provide the necessary documentation. The exact documents needed can vary depending on the type of SBA loan you’re applying for. Individual lenders may also have additional requirements.

Here’s a list of the most common documents you should be expected to provide:

• Borrower informationSBA form 1919:This provides the lender basic information about your business and details on your loan request.
• Personal financial statementSBA form 413:Used by the SBA to determine your financial condition, creditworthiness, and ability to repay a loan.
• Loan application history:Since SBA loans aren’t intended to be a primary source of financing, you must demonstrate you have attempted to and been unable to obtain a loan from other lenders.
• Proof of business ownership:Copies of tax returns, articles of incorporation, or stock certificates are several examples of documents that may be accepted as proof of ownership.
• Business plan:A document that outlines your company’s goals and how it plans on achieving them. This should include information on your company’s leadership qualifications, industry analysis, revenue projections, and more.
• Business license and relevant industry certifications:If not included with your business plan, you may be required to provide proof you can operate legally in the industry by providing copies of business licenses or industry certifications.
• Financial statements (if applicable):As a startup, you should provide as much information as you can such as tax returns, profit and loss (P&L) statements, or balance sheets.
• Financial statement projections:If not already included in your business plan, you should provide more details on your expectations for revenue and expenses.

What To Expect After Applying

It can take between one and two months after you submit your application to receive proceeds from the loan. To give you an idea of where you’re in the process, here’s a timeline of events that will occur and how long it typically takes to reach these steps.

1. Review Letter of Intent (1 to 2 Weeks)

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2. Undergo Loan Underwriting (1 to 3 Weeks)

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3. Receive Commitment Letter (Several Days to 2 Weeks)

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4. Sign SBA Closing Documents (Several Days to 2 Weeks)

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Frequently Asked Questions (FAQs)

Is it hard to get an SBA startup loan?

Getting an SBA startup loan can be difficult because lenders know that new businesses have a high failure rate—and a commonly cited figure is 90%. Without a prior track record of success or a strong business plan, getting approved could still mean higher rates and fees.

Do SBA lenders have the same requirements to get a loan?

Lenders can have varying requirements. While the SBA has certain criteria that must be met for its loans, individual SBA providers can have more strict requirements for things like credit score, time in business, and annual revenue.

How long does it take to get an SBA startup loan?

It usually takes one to two months to get an SBA startup loan. In general, SBA loans can take between four and six weeks, but as a startup business with little to no prior history of performance, your SBA lender may require additional documentation that can take time to review.

Bottom Line

SBA startup loans can be complex due to the strict qualification requirements and amount of paperwork that’s often involved. By knowing what’s required in each step, you can be proactive in preparing the necessary documentation to present your business in the best possible way. Doing so cannot only improve your chance of getting approved, but it can also save you time and help get you funding more quickly.