How much income do I need for a startup business loan?

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How much income do I need for a startup business loan?

The amount of income you will need for a startup loan is going to depend on how much your loan amount is and if you have filed a business tax return.

A startup that does not have any business revenue can still be approved for a loan. They will just need to show two things:

1. That they make enough money to cover their personal expenses (as the SBA loan is not meant to do this),
2. The SBA loan will jumpstart their business so their business can begin paying back the loan as soon as possible.

A startup that has already filed a tax return will also need to show:

1. They can cover their personal expenses without the SBA loan,
2. Their business is able to cover its current expenses without the SBA loan.

Why is a profit on your business tax returns important?

This is why it is very important for businesses who want SBA funding to show a profit on their most recent tax return. Your business must be profitable in order to receive SBA funding. No one wants to give you a loan when your business is losing money. SBA loans are meant to help you grow your business not get you out of the hole.

When you are an existing business almost everything is reliant upon your historical cash- flow, meaning how much money your business has made and retained over the last 3 years. If you are a new business with less than 2 years of tax returns, then your financial projections (how much money your business is going to make) will also matter greatly.

Here is a breakdown of what any startup will need to qualify for a $50k loan.

1. You will need enough income to cover your personal expenses.
2. Your business tax return will need to show a profit.
3. Your business will need to be able to show a profit of around $11,500 after your business debts are paid AND/OR your projections will need to show it can pay back a monthly loan of about $761.

When you are borrowing money for your business, the most important thing is making sure your business is able to pay back the money. Either your business has tax returns that show it can pay back the SBA loan or you will need projections to show how you can pay the money back. Secondly, your current income has to be able to cover your personal expenses.

Final note...

Additionally, in order to get approved for the SBA loan you will also be required to put an equity injection into your own business. Your equity injection will be 5-20% of your projection cost. This more than your income will determine how big of an SBA loan you can be approved for.

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.

Request Your Free Consult

Continue Your Startup Journey

If you need more startup loan help, make sure you check out these articles:

• What disqualifies you from getting a startup SBA loan?
• Why can’t startup businesses easily get financing from banks?
• Do you need a down payment for an SBA loan?
• Do banks loan money for business startups?

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