Do I Qualify for an SBA Loan?

SBA Loans offered by the United States Small Business Administration are an excellent financing option for small business owners. These loans are backed by the U.S. government and are designed to encourage the growth and expansion of small businesses. SBA Loans are known for their flexible terms on working capital, start-up expenses, and more. Evolve Bank & Trust is a preferred SBA Lender, with designated authority from the Small Business Administration, which allows business owners to process an SBA loan with ease.

Determining if you meet the requirements for an SBA loan is the first step to financing your dreams. The most straight forward requirement is that you must operate a business for profit in the United States. This means projects based outside of the US or operating as non-profit are not eligible.

What’s Your Creditworthiness?

SBA loans are based on the cash flow of your small business. Applicants must demonstrate their business has the ability to repay the loan.  The business is usually evaluated through financial statements, tax returns and cash flow projections. Your business and personal credit are also an important factor in any loan and can affect rates and products available to you.

Do You Have Credit Elsewhere?

Furthermore, the credit elsewhere test is part of the SBA process.  Borrowers must demonstrate that they cannot obtain financial through traditional methods on reasonable terms.  The most common reason for terms to be unreasonable is that SBA offers longer term financing, which in term provides for lower monthly payments.

Are You an Ineligible Businesses for an SBA Loan?

Finally, your business cannot be in an ineligible category of business. As mentioned above, non-profit businesses are not eligible for SBA Loans, however the list extends further. Financial businesses engaged in lending and life insurance companies are not eligible. Beyond that, passive businesses owned by landlords or developers are not eligible as the assets acquired or improved with the loan proceeds will not be actively used. Private clubs that limit membership for reasons other than space limitations are not eligible to apply. For clear reasons businesses focused on pyramid sale plans and gambling are also not eligible for an SBA Loan.

The full list of SBA Loan eligibility requirements can be found on the Small Business Administration’s website. Here you can also find approved uses for loan proceeds and resources for applicants and small business owners. Interested in getting starting your journey with Evolve SBA?