July 1, 2024 - 2 Min Read
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In order to get a startup SBA loan you will need a down payment, this is called an equity injection. Investors call it “skin in the game” or “exposure”. The main two questions here are:
Why do you need a down payment?
How much of a down payment do you need?
Lenders want to make sure their money is not the only money at risk when you open your business. Showing you saved your own cash, or you’re willing to take from your retirement or HELOC shows the dedication and belief you have in your own business.
There are people who are not willing to take debt out on their business because they do not want to be responsible for paying it back. Instead, they seek out grants because it’s free money with no consequences. There are people that take loans that don’t have down payments and blow them. They file for bankruptcy or let debt collectors come after them. But it’s a higher chance that when your own money is at stake, you’ll care a little bit more about ALL the money you are investing into your business. You’ll also put more of an effort into making your business succeed.
Depending on the lender, your business, as well as your demographic you will have to put between 5-20% of the cost of your project into your business. For example, minority owned businesses and women owned businesses who borrow up to $350k will need 5%. Everyone else will need between 10-15%. Depending on the type of business you have or the risk that comes with it, you may have to put in 20%.
We have 25 lenders that we work with across the country. We know which ones like your industry, and what they need to see from you to be approved.
To find out how much your equity injection will be, schedule a free lending consult with us.
To discuss your specific situation and how much you can be approved for in an SBA working capital loan for your business, request your free consult below.
If you need more startup loan help, make sure you check out these articles:
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