How to Get an SBA Startup Loan?

How difficult is getting an SBA startup loan?

It is not difficult to get an SBA business startup loan if you do the following:

Create a thorough business plan.
Create clear & reasonable financial projections.
Have an equity injection of 5-15%.
Find a lender who accepts your qualifications.

What steps can you take to guarantee an SBA loan approval?

1. Create clear & reasonable financial projections.

Financial projections is a two-three year breakdown of your business revenue and expenses. Financial projections go hand in hand with a business plan. We help our clients create both, and we always start with financial projections as these are the numbers that the business plan will have to justify.

When you create your financial projections, you will have to understand how you will get to the revenue you are projecting, and why you will need the expenses you are listing.

2. Create a thorough business plan.

A thorough business plan is crucial to being approved for a startup SBA business loan. This business plan is going to help you determine all aspects of your business and convince a lender to fund your dreams.

3. Have an equity injection of 5-15%.

The third step is sourcing your equity injection. At this point you know what the total cost of your project will be. And as a startup business you will need 5-15% of that cost to put into your own business.

For example, if you want to open a laundromat and the total cost to do so is $200k, then you will need 5-15% of that cost to put into your own business, and the lender will loan you the rest. You should know where this equity injection is going to come from before going for the loan.

4. Find a lender whose qualifications you meet.

Finding a lender whose qualifications you meet is one of the hardest parts of getting an SBA startup business loan. There are hundreds if not thousands of SBA lenders who provide SBA loans in the United States and they all have different minimum qualifications. You will have to do your research, and contact the lenders you find to see which lender:

Can fund the loan amount you are seeking- We have lenders who refer clients to us because that person came to them seeking a lower loan amount than what the lender offers. Many SBA 7A lenders offer loans $350k and higher. Some offer loans at $100k and higher, and very few at $50k and higher. CFDI loan approvals can go as low as $5k. Before choosing a lender, make sure you meet their minimum loan amount.
Accepts your credit score- some SBA lenders do not have minimum credit scores, and care more about what is in your credit report than the score itself. For example, if you have high utilization that is bringing your score down to the 500s, you may still be able to get approved vs having a 500 score because you don’t pay your bills.
Likes your industry- if the lender does not like your industry, then they may make you meet extra requirements that you may not have to meet with another lender who likes your industry.
Accepts your equity injection- CDFIs normally ask for 5% of equity injection on any loan amount under $350k for minority owned businesses. Non-CDFI lenders will most likely require 10-15%. You want to find a lender that accepts the amount of equity you bring to the table.

Final note…

Making sure you follow the above steps will improve your chances of being approved, thereby making getting an SBA startup business loan a lot easier.

To improve your chances even more, let us help you get approved for your SBA startup business loan.

Continue Your Startup Journey

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