How to Qualify for an SBA Loan

Written by

Meow Technologies, Inc.

Published on

Sunday, June 16, 2024

How to Qualify for an SBA Loan

Small Business Administration (SBA) loans provide critical funding for entrepreneurs and small business owners to start and grow their companies. These government-backed loans offer competitive interest rates, reasonable repayment terms, and lower qualifying requirements than conventional bank loans.

Getting approved for SBA financing can still be challenging, but understanding the basic eligibility criteria will prepare you to qualify. This article outlines the key steps and requirements to obtain an SBA-guaranteed loan and secure the capital you need to make your business dreams a reality.

SBA Loan Requirements

To qualify for any type of SBA loan program, you must meet criteria set both by the SBA itself and your chosen lender. Here are the typical standards you’ll need to fulfill:

Business Structure and Operations

Your company must be structured as a for-profit entity and registered/licensed to operate legally in the United States or its territories. Nonprofit organizations and speculative ventures generally do not qualify.

Ineligible Businesses

Certain industries cannot obtain SBA loans, including lending, multi-level marketing, gambling, investment or lobbying firms.

Business Location

A physical location where your business currently operates or intends to operate must be within the U.S. borders.

Credit Score

A minimum personal credit score of 690 is recommended for SBA loan approval, although requirements vary by lender. Expect to provide your credit history.

Time in Business

You must demonstrate that you have invested your own time or money into the operations of your business. Many lenders require at least 2 years of operations to qualify.

Need and Use of Funds

You’ll need to prove that you cannot access the requested amount of financing through traditional sources and that SBA loan proceeds will be used only for sound business purposes.

Size Standards

Your business must meet industry-specific size standards according to SBA guidelines regarding average annual receipts or number of employees.

Loan Application History

Expect to provide records indicating any previous government-backed or conventional small business loan applications you have submitted.

Types of SBA Loans

A variety of SBA loan programs exist to meet different business needs. Each has its own requirements, but the most popular options include:

7(a) Loans

The SBA’s primary and most flexible loan program is further broken down into categories based on particular use cases, loan amounts, and eligibility criteria.

Standard 7(a) loans up to $5 million carry a 75% to 85% government-backed guarantee. Express loans up to $500,000 have a 50% guarantee but faster turnaround. Export loan proceeds must finance international trade activity.

504 Loans

504 loans issued through Certified Development Companies (CDCs) provide up to $5.5 million in fixed-asset financing for major equipment purchases or commercial real estate acquisition.


Loans under $50,000 are administered through nonprofits to finance startups and existing micro-enterprises. Credit standards are more flexible than conventional SBA loans.

Disaster Loans

Businesses affected by declared disasters can access capital through low-interest Economic Injury Disaster Loans from the SBA. Rapid turnaround times apply.

Choosing an SBA Lender

Hundreds of banks, credit unions, and other lending partners have undergone certification to issue SBA loans. Options to consider include:

SBA Preferred Lenders: Expedited processing comes through delegated authority to approve loans without SBA review.

Current Financial Institutions: If you have an existing banking relationship, inquire whether they provide SBA loans.

Compare Interest Rates/Fees: Weigh the ongoing costs of borrowing through different lenders.

Ask About Experience: Find out their historical volume and approval rates on SBA loan programs.

Applying for an SBA Loan

After selecting a lending partner, prepare to complete their SBA loan application, which will likely seek:

Personal Financial Statement/Tax Returns

Provide several years of financial statements and tax documents for all owners with 20% or greater stakes.

Business Financial Statements/Tax Returns

Submit several years of financial statements, tax returns, existing debt schedules, and a current aging report on all business assets/liabilities.

Business Information

This includes licenses, registrations, business plans, ownership percentage breakdowns, and details on day-to-day operations.

Collateral Details

Lenders will require pledged business or personal assets to secure the loan in case of default. Provide details on the value, type, and source of potential collateral.

Alternative Financing to SBA Loans

If you need quick financing or have concerns about securing an SBA loan, other small business funding options exist:

Business Credit Cards

Rewards cards offering 0% introductory rates can provide an initial infusion of capital. Take care to minimize interest charges once rates rise.

Business Bank Loans

Conventional loans often fund faster than SBA options but have stricter eligibility requirements. Shop around for the best terms and flexibility.

Business Grants

Federal, state, corporate, and nonprofit grants do not require repayment. Award amounts and eligibility vary greatly between programs.

FAQs on Qualifying for SBA Loans

How long does SBA loan approval take?

Anywhere from 2 weeks to 6 months depending on lender workload, loan type, and completeness of your application.

What FICO score is needed?

Each lender sets score requirements, but applicants with scores below 690 will likely face more scrutiny or denials.

Is collateral mandatory for SBA loans?

Lenders must secure collateral to the fullest extent possible. Some smaller loans under $25,000 may secure exceptions.

Can I get an SBA loan with bad credit?

Approval with poor personal credit is very unlikely. Expect to provide explanations for any past credit problems.


Now that you know the essential steps for securing an SBA loan, you can approach lenders prepared to qualify for approval. Pull together the necessary documentation, compare offers from multiple partners, and remain diligent yet patient throughout the application process.

With proper planning and persistence, an SBA loan can help turn your business vision into reality. Use this financing to hire employees, expand locations, purchase inventory and equipment, or bridge cash flow gaps. Let the SBA help fund the next stage of growth for your startup or existing small business.

Meow Technologies is a financial technology company, not a bank or FDIC-insured depository institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDICs deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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